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New Star International creates Asian hedge fund

New Star International Investment Products has expanded its stable of guaranteed hedge funds with the New Star capital guaranteed Asian hedge fund.

The fund aims for capital growth by investing in Asian countries, including Japan, Hong Kong and Singapore, using long and short equity strategies.

Investors are guaranteed the return of at least their original capital at the end of the six-year term. An interesting feature of the capital guarantee is that as the value of the fund grows each year, a third of that growth can be locked in to form part of the guarantee.

The fund will be managed by Ian Beattie and Michelle Sanders. Beattie is a specialist in Asian equities excluding Japan. He joined New Star Institutional Managers, which was formerly World Invest, in 1996. Sanders joined New Star Institutional Managers as Head of Japanese equities in 1992 from Kleinwort Benson Investment Management, where she was a Japanese equity manager.

Corporate restructuring in Asia has created opportunities for hedge funds because these companies are often undervalued. Hedge funds can exploit these opportunities through short selling, which unit trusts or an Oeic investing in the same region cannot do.

The fund may appeal to high-net-worth investors who want to diversify their portfolios to include an Asian fund that does not simply follow volatile Asian markets. However, the Asian markets are complicated and the hedge fund managers will need to grasp the finer details of restructuring to make the right decisions about individual stocks.

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