NEW STAR INVESTMENT FUNDS
SELECT OPPORTUNITIES FUND
Aim: Growth by investing in undervalued companies
Minimum investment: Lump sum £5,000
Investment split: Small cap 60%, Aim stocks 30%, mid cap 7%, large cap 3%
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0845 6088704
The panel: Dawn Slater, Principal, Dawn Slater Associates,
John Hill, IFA, Positive Solutions,
Malcolm Hooper, Partner, Independent Financial Advisory Services.
Suitability to market 8.4
Investment strategy 8.0
Past performance 8.5
Company's reputation 6.7
Product literature 8.7
The New Star select opportunities fund, managed by former Rathbones fund manager Patrick Evershed, aims to produce capital growth by focusing mainly on undervalued smaller companies within the UK.
Considering how the fund fits into the market, the panel are positive. Slater says: “It fits very well. The name of the fund says exactly what it is aspiring to invest in. Other funds may look for recovery or special situations, but it is not always obvious in the title and therefore requires more research to find them.”
Hill says: “It looks perfect for people looking for income over the long term, for example, people who are retiring.” Hooper says: “It seems to fit quite well alongside all the other companies who are trying to come up with a new range of investments in the current gloomy climate.”
Identifying the type of client the fund could attract Hill says: “At first look, I suggested people who are retiring, but on closer examination, it fits into the market well for people who are looking for serious growth.” Slater says: “Those with a medium attitude to risk and as part of a well diversified portfolio. Realistically, it will be for growth orientated clients rather than income seekers.” Hooper says: “Perhaps retiring people with a capital lump sum that they hope will produce a good income and hopefully not experience capital erosion.”
Looking at the marketing opportunities the fund could provide Slater says: “The fund manager is so well known that I don't think the fund needs marketing. However, with markets slowly recovering, this launch is ideally placed to do well over the next three years.”
Hooper says: “It is ideal for the vastly diminishing investors who are looking at Oeic and unit trust investments.” Hill says: “It could be used for Pep transfers from funds that have been very disappointing in their performance.”
Pointing out the main useful features and strengths of the fund Slater says: “That the portfolio is restricted to around 100 stocks, with a good sell discipline.” Hill goes for the fund manager. Hooper says: “The more conservative approach to investment.”
Discussing the investment strategy of the fund, the panel are impressed. Slater says: “It is very good. Sell at the top, buy at the bottom. This is especially valuable as Patrick has enough leeway to ensure he can action those buys and sells. Not all fund managers can, or do.”
Hill thinks it is good if a longer-term vies is taken. He points out that the fund employs true active management and highlights its conservative investment approach. Hooper says: “It seems to have a strong foundation. However, the company has nothing by the way of performance history other than how the fund managers have performed with previous companies.
Highlighting the drawbacks of the fund Slater says: “Some stocks may be sold too soon in a fast rising market and some performance may be missed. This is not necessarily a disadvantage, but perhaps the manager acting more cautiously at this time.” Hill says: “People who like trackers will not like it because it is too aggressive for them.” Hooper cannot see any specific disadvantages, but says that only time will tell.
Assessing the company's reputation Slater says: “It's been very good from the beginning and it is still building. Alan Miller's fund has not performed very well which is disappointing, but otherwise the rest of the funds are looking good and delivering the promised returns.” Hooper is unsure because the company is new. Hill says: “I like it. It is recruiting some of the best fund managers around.”
Reviewing New Star's investment past performance record Slater says: “Apart from Alan Miller's fund, so far so good. With markets as low as they are, this suits a number of the current funds and will suit the new higher income fund and Patrick's new fund as well. Again, Hooper is unsure because the company is recently established. and Hill thinks New Star compares favourably with other fund management companies.
Identifying the companies which are likely to compete with the New Star fund Slater says: “It would have been ABN Amro's UK select opportunities, but not now, not until we see who the new managers are. So I would say it's Fidelity special situations and perhaps Rathbone's special situations, which can maintain Patrick's style and performance.” Hill goes for ABN Amro, Artemis, Solus and says that any company that has lost a fund manager will probably try to outperform. Hooper thinks there are too many to mention.
Slater and Hooper think the charges are fair. Hill says: “My clients are more concerned with performance, not with charges. But the charges on this fund are fair.”
Slater and Hooper also think the commission is reasonable, whereas Hill makes the point that advisers always want more.
Looking at the product literature Slater says: “It is easy to read. It's always good to add some specific stories.” Hooper says: “If it is all to be believed, it is very impressive.” In Hill's view, the literature is brilliant.
Summing up Hooper says: “I am totally aware that all the people mentioned in the literature have impressive past history, but how are we to know that it will prevail in this time of turmoil in investments?” Hill concludes: “This suits many of clients who have been moaning about some of the funds that have been slipping lately.”