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New Star offers guide to risk

New Star’s fund of funds team is offering advisers a free guide to risk in response to strong IFA demand.

The firm says the guide is written in a straightforward and concise way and can be used by both investment specialists and advisers with more life and protection focus.

The guide examines definitions of risk, how it is measured and the trade-off between risk and reward. It also outlines the New Star fund of funds team’s approach to controlling risk.

It defines academic measures of risk such as standard deviation and the Sharpe, Treynor and information risk ratios and explores these in the context of modern portfolio theory.

The New Star fund of funds range includes seven funds of funds designed for different risk appetites. These are the balanced, active, tactical, managed, European, American and Asian portfolios.

Fund of funds head Mark Harris was previously at Edinburgh fund managers, which sold its fund of funds to New Star in October 2003. Craig Heron, who works with Harris, focusing on fund and manager selection, was also previously at Edinburgh.

Harris says: “I believe it is essential that advisers have a comprehensive understanding of how risk is managed when considering returns. This guide addresses that issue and provides advisers with an easy reference that can be used when considering appropriate investments for clients.”

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