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Product matters

You may groan at the thought of another New Star fund and wonder how this one can differentiate itself from some of the other funds in the stable. Well, for a start, its UK special situations offering is a tiny fund at only £2.5m and it is not being run by a fund manager you will have heard of. His name is James Ridgewell.

Ridgewell has been working in the City for six years, spending time with Abbey Life and then World Invest prior to its takeover by New Star.

For the last 12 months, he has been running this fund but he has also been helping Stephen Whittaker on the UK growth fund, something he has found enormously beneficial.

This is a special situations fund in the true sense of the phrase. It is a bottom-up, stock-specific fund that will invest just about anywhere. There are currently 80 holdings but Ridgewell is keen to reduce this to 65-70.

The market cap split is fairly even between large-cap, mid-cap and small-cap stocks. However, Ridgewell points out that this is as a result of stock selection rather than tactical asset allocation.

Valuation is a very important factor but the management, especially in small companies, is even more important. What really comes through is that Ridgewell will look at any stock, regardless of size or sector, and that no one rule fits all in investment terms.

This is an interesting fund that has no constraints and a fund manager with only a short track record, albeit an excellent performance. It is one worth watching for the future. You do not have to wait until a fund is £30 or £50m before you start buying it.

Ben Yearsley is investment manager at Hargreaves Lansdown

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