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Threadneedle sharp

Hundreds of thousands of investors have taken New Star to their hearts since it launched in the summer of 2001 but today it is a very different story.

It recently renegotiated its banking covenants and announced that assets under management had fallen to £14.3bn from £19.8bn since the end of June.

Stephen Whittaker, who arrived with a glittering CV from Invesco Perpetual and was tasked with resurrecting the performance of its flagship UK growth fund, is leaving and a fortnight ago came the temporary suspension of its £470m international property fund although, ironically, its performance figures stack up pretty well.

It was only a few years ago that New Star was advertising that six of the seven funds it offered were top-quartile. The ad showcased its superior performance compared with its biggest rivals.

It made great copy because it riled fund managers who were highlighted as under-achievers. Alan Burton, the then managing director at Standard Life Investments, labelled the ads a “disgrace” while Scottish Widows claimed that the time period chosen by New Star made a decent “marketing story”. Legal & General were miffed that a manager with a passive bias was being compared with an active outfit.

If you had a similar table today and looked at three-year performance figures classified by the IMA to November 24, less than 10 per cent of New Star’s funds would be top-quartile performers, according to Morningstar.

But putting New Star aside for a moment, what of the rest? In short, an updated table shows that time has not been unkind only to New Star. In the 2003 advert, Fidelity was second to New Star, with 48 per cent of its funds in the first quartile. Over the past three years, less than a quarter make the grade (but just in case you wondered, special situations still does).

In 2003, Schroders was in third place with 35 per cent of its fund in the top slot. It now has fewer than 25 per cent in the first quartile, with its big sellers – UK alpha and Mid-250 underperforming peers. Standard Life’s criticisms of the ad were on sketchy grounds in 2003 and any claims that they have turned the business around would still fall on deaf ears – barely a fifth of its funds are in the top 25 per cent. Likewise, Scottish Widows, which was mid-table back in the day with 23 per cent of funds in the first quartile, now has around 30 per cent hitting the mark.

Remember Gartmore? Its number of winners today is around 25 per cent up from 17 per cent (again, in case you wondered, its popular European select opportunities is still up there with the best – although UK Focus, which gained a lot of attention, has slipped to a miserable fourth quartile).

The most noticeable difference is the performance of M&G. At the time of the original comparison, it was rooted to the foot of the table with just 7 per cent of its funds in the top quartile. It has since transformed itself, with David Jane at the helm. It has once again become an IFA favourite and funds such as recovery and global basics have swelled to more than £2bn in size. But surprisingly, it has not turned its fund range into a formidable team of winners. Less than a third makes the top grade.

If the ad was run today (and it is not Invesco Perpetual), who would top the table?

As its recently retired marketing director Dick Eats frequently told me, it did not rush to launch a technology fund in the late 1990s. It did not launch a commercial property fund at the height of the boom either, although it did launch a disastrous target return fund.

Over the past three years, it has quietly gone about its way, fending off criticism of having dog funds and losing fund managers aplenty. It is, of course, Threadneedle. Over the past three years, 56 per cent of its funds have achieved first-quartile performance. Not that it will shout this from the rooftops – it has never been its style.

Paul Farrow is digital personal finance editor at the Telegraph Media GroupMoney Marketing


FSA has no role in bank pay so why meddle with IFAs?

First, I want to comment on Ted Cordener’s letter (Money Marketing, November 20) where he urges the Chartered Insurance Institute not to steal the IFS name for the CII’s own use.


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