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New Star takes UK out of this world



Type: Oeic.

Aim: Growth by investing in UK companies.

Minimum investment: Lump sum £1,000, monthly £100.

Investment split: 100 per cent in UK equities.

Isa link: Yes.

Pep transfers: Yes

Charges: Initial 5.25 per cent, annual 1.5 per cent.

Commission: Initial 3 per cent, renewal 0.5 per cent.

Tel: 0845 6088702



Suitability to market 8.4

Investment strategy 9.4

Past performance 8.0

Company&#39s reputation 8.7

Charges 6.7

Commission 7.7

Product literature 9.0

The panel: Karen Shaw, Partner, Financial Independence,
Clive Davies, Director, Glyn Heulyn & Co,
Colin Shaw, Director, Woodfield Financial Services,
Steve Barton, Steven Barton Financial Services.

New Star Asset Management&#39s UK growth fund is an open-ended investment company designed for capital growth by investing in UK companies. It is managed by Alan Miller who previously ran the Jupiter special situations fund.

Assessing the market suitability of the fund, Davies says: “The fund has a good role to play, considering the confidence at present in the market, especially regarding tracker funds. Clients are now looking for funds with a proven fund manager at the helm. Alan Miller has the experience and the track record in the UK market to achieve above average growth.”

Barton says: “UK investments seem to be the favourite of UK investors, despite it being only about 10 per cent of the world market. Having said that, a new fund in UK markets will be a new favourite due to the rarity of the company management and past performance.”

Shaw of Woodfield Financial Services says: “One could say that there are enough unit trust funds and Oeics out there already, but most tie fund managers&#39 hands in some way. Here, they are given complete flexibility.”
Shaw of Financial Independence says: “The investment strategy projected is fresh and should encourage investors to buy in. Clients are looking for good returns on their growth funds, which have been badly affected by the performance in the last few years on the stockmarkets.”

Identifying potential clients for the fund, Shaw of Woodfield Financial Services says: “It is probably for the risk-taking client. Often new funds get off to a flying start but the opposite can also occur.

Shaw of Financial Independence says: “Those wanting longer term capital growth with a balanced view of risk profile. Also, clients invested in tracker funds who are disappointed in tracker funds tracking downward trends.”

Davies says: “Most equity investors as it is a strong fund to have as part of a portfolio as I feel that it could follow the UK all companies sector. The fund is also ideal for clients who are looking at equities for the first time and do not want any exposure to Europe or the US.”

Moving on to the marketing opportunities the fund is likely to provide, Barton says: “It has an experienced fund manager with exceptional well structured past performance, managing a new fund in a relatively low priced market. This should provide opportunities to market this fund.”

Davies says: “It is ideal for newsletters to existing clients who are equity based investors to keep them up to date about the launch of a new fund if we, as advisers, believe it offers great growth potential for our clients. It is an excellent time for clients to invest as the markets are low.”

Shaw of Woodfield Financial Services says: “It will allow an extra choice for those clients looking to put more money into equity-based funds. The Isa option is there, especially for clients with shares who may use up their annual capital gains tax allowance.”

Turning to the useful features and strong points of the fund, Shaw of Financial Independence mentions the pedigree of the fund manager and the open investment strategy.

Davies says: “The main useful feature is the freedom given to Alan Miller to manager the fund as he sees fit and not have any restrictions imposed on him. That is the most important aspect for any investor &#45 to know that the fund is properly managed.”

Discussing the fund&#39s investment strategy, Shaw of Woodfield Financial Services says: “It gives a good alternative to tracker funds, which have had a dreadful time over the past 15 months.”

Davies says: “I like the concept that the investment decision is down to the fund manager&#39s direction and not tied down by weightings in different sectors. This, I believe, could be an important issue not just in prosperous times, but also in a negative market where cash exposure can be taken to help protect investors.”

Barton says: “In seeking long term capital growth, Miller has set his sights similar to his old fund, the Jupiter special situations fund. The option to move across most of the UK market gives him ample opportunity to switch perspective to achieve his stated aim.”

Looking at the drawbacks of the fund, Davies says: “The only disadvantage that I see is that there are no income units available with the fund. Clients always like the opportunity of preserving some income from their investment. It would also be good to see the initial charges down to a maximum of 4 per cent.”

Shaw of Woodfield Financial Services says: “It could be viewed as being a bit too spicy. These days individual shares can drop like a stone on poor figures or profit warnings. Two or three of these would hit the fund&#39s performance.”

Barton says: “Some of Miller&#39s old favourites from the Jupiter fund will no doubt be purchased. He will have a smaller team behind him and may lose out without that additional research and advice.”

Considering the company&#39s reputation, Shaw of Woodfield Financial Services says: “It is too early to establish one, but John Duffield is a big name in the industry and has attracted fund managers with excellent performance records.”

Davies says: “It is a new beginning for John Duffield and his team and their reputation will count for nothing if the fund does not perform. It is very important for the fund to have a good start in the market, as it will be closely monitored by the press.”

Shaw of Financial Independence says: “From a standing start, to have in excess of £1 billion under management and attract high calibre fund managers, puts New Star in an enviable and strong position.”

Turning to past performance, Davies says: “Past performance of funds previously managed by Alan Miller has been very impressive. They have achieved top quartile over the past four years. This is important now, especially as clients are looking closely at the fund manager&#39s track record.”

Shaw of Financial Independence says: “So far, so good &#45 in fact, so far, so wonderful. Time will give us more of an overall picture of past performance. However, as we all know, there is more to past performance than just the figures. The past performance of the fund managers, the administration and efficiency of the company are all important.”

Barton adds that the fund manager and his team are replicating styles with proven performance.

Identifying the main competition, Barton selects ABN Amro growth, Jupiter special situations and Fidelity aggressive funds. Shaw of Woodfield Financial Services says: “As usual, there are Fidelity, Invesco Perpetual and Schroders with fine performances in recent years.”

Shaw of Financial Independence says: “Sour grapes from the companies which have had their star performers taken from them, such as Jupiter, will probably make a concerted effort to outperform past colleagues. But perhaps some from the stables of Gartmore, ABN Amro and Artemis.”

On the issue of charges, Barton and Shaw of Woodfield Financial Services think the annual management charge is high. Shaw of Financial Independence and Davies think they are standard.The panel agree that commission is in line with the market.

Looking at the product literature, Shaw of Woodfield Financial Services says: “I like the literature. It gives the impression of a space age company.”

Shaw of Financial Independence says: “It is well laid out, easily understandable and looking for information is easy.”

Davies says: “It is very good, clear and easy to read from a client&#39s viewpoint. It has good background on the fund managers involved and the reasons behind the launch of the company.”

Barton says: “There are too many separate leaflets and it is weighty for postage. the information is clear and well presented. Being a new fund, it is good to have details of fund managers.”


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