New Star head of fund of funds Mark Harris is to launch a global cautious portfolio in October in response to growing demand.
The fund will be Harris’ first fund of funds launch since 2000 and will invest 40 per cent in fixed interest for income and to reduce volatility.Harris describes the fund’s property and commodities diversification, which takes advantage of non-Ucits retail scheme rules, as “the key to the product”, offering controlled exposure to more esoteric ideas. Nine per cent of the fund will be in specialist investments of this kind, including an initial 1-2 per cent in Japanese real estate investment trusts and a further 1-2 per cent in the Winton diversified fut- ures fund. Harris says he is trying to offer cautious investors exposure to areas of the market they would normally avoid. The fund will not initially be eligible for inclusion in an Isa or Pep but Harris expects the Inland Revenue to review these rules by April 2006. He expects to raise a modest 3m-5m initially, with a strong after-market. Initial asset allocation will be 39 per cent UK equities, 28 per cent UK bonds, 11 per cent global bonds, 9 per cent global equities, 4 per cent cash and 9 per cent special- ist investments. The fund launches on October 10. Harris says: “This will be the lowest-risk product in our range. People have been telling me they want this level of risk. The NURS rules have allowed me to do some quite interesting things in terms of diversification that I have wanted to do for a couple of years. Being able to buy a range of asset classes is the way forward.” Bates Investment Services head of investment James Dalby says: “There have been some really punchy NURS launches in the cautious managed sector lately, with Insight and Gartmore also launching products which are making use of esoteric diversification. This fund will be very interesting.”