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New Star sees £3bn outflows

New Star is looking to build on its emerging market offering after its Heart of Africa fund grew to £52m in the first five months.

The company believes that increased economic growth trends and reduced political risks mean that UK investors are set to increase their emerging market exposure in the future.

Heart of Africa, managed by Jamie Allsopp, launched last October and took £34m in its three-week offer period.

New Star said last week that its funds have seen outflows of 12 per cent this year, falling from £23.3bn to £20.3bn, as a result of volatile market conditions.

Last year, assets under management increased by 9 per cent from £21.1bn to £23.3bn. However, changing market conditions have seen outflows compared with the second half of 2007. Net revenue rose by 29 per cent last year to £173m and operating earnings were up by 36 per cent to £98m from £72m.

Chairman John Duffield says the current market is the most challenging time for New Star since it began trading in 2001.

The company’s share price plummeted from 452p to 91p between July 2007 and March this year but shot up by 15 per cent on Tuesday this week to 107p.

Duffield says: “We expect this to be a year of consolidation. Our company has entered a more challenging environment, with a diver- sified mix of funds covering a broad range of asset classes and a wide range of retail and institutional clients, in the UK and overseas.”

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