New Star rising for investors
New Star International is hoping to bring a breath of fresh air to Hong Kong investors with the launch of seven retail funds, building on the young company's global ambitions.
Formed by veteran investor John Duffield, who started Jupiter Asset Management, New Star launched its first funds in the British retail market two years ago. It had amassed US$6 billion in funds under management by the end of May, with more than 500,000 individual holdings.
The Hong Kong rollout is part of New Star's aggressive expansion drive. It remains on the lookout for acquisitions after purchasing institutional investors WorldInvest and the retail fund business of Aberdeen Asset Management.
'Hong Kong has fairly sophisticated investors who know what they want,' said Philip Goldsmith, managing director of New Star International.
'Obviously, this has not been a particularly bright time for fund sales in Hong Kong. Equity funds have been pretty slow, but with markets around 20 per cent off the bottom around the globe, there is more interest. We think that if you have funds that have fantastic performance, then people will buy them.'
The seven actively managed funds launched in Hong Kong include three ranked as the best performing in their sectors for the six months to the end of May, according to Standard & Poor's data. They are New Star European Growth Fund, Japan Recovery Fund and UK Dynamic Fund. Asian, emerging markets, a US fund and a bond fund are also part of the retail offering.
The bond fund, expected to be popular in the current climate, invests only in government paper. Unlike many of its peers, it has the flexibility to switch between US treasuries and higher yield emerging markets bonds in any ratio.
New Star is sticking to the investment philosophy that paid off for Mr Duffield at Jupiter, which was sold to Commerzbank in 2000 for #505 million (HK$6.6 billion).
The company hires star managers, all of them based in London. It pays market rates and does not give bonuses, but all employees have equity in the firm. The unorthodox style has proved attractive in the British market, with New Star accounting for about 10 per cent of net sales in the past 12 months.
'We don't think you can manage money by committee,' Mr Goldsmith said. 'We don't have stock lists, we don't have investment committees. If we hire a manager we are sufficiently confident in him that, subject to the usual regulatory stuff, we say this is your fund brief, go and buy or sell what you want.'
The company is hoping to come to a distribution agreement with a bank in Hong Kong. The funds will also be available through financial advisers and private banks. The minimum initial investment is US$10,000 with at least US$5,000 allocated to a single fund. Annual management fees are 1.75 per cent for equity funds and 1.25 per cent for bond funds, after an initial charge of 5.25 per cent.
