UK and European Growth funds to offer discount during July launch period
New Star's forthcoming UK and European Growth funds will both be offering a 2.25% discount for Pep and Isa transfers during their July launch period.
The funds, which are in their offer periods from 2-20 July, have an initial charge of 5.25% and an annual of 1.5%. There is also a 1% discount for non-transfer business until 20 July.
New Star is confident that the UK fund, run by Alan Miller who used to run Jupiter UK Special Situations, and the European, run by Richard Pease, will attract strong interest from intermediaries. The group had its official launch and unveiled its new logo in London last week.
Howard Covington, chief executive at New Star Asset Management, said the low levels of equity markets meant its fund managers were well placed to pick up value, and described this timing as 'fantastically lucky' for the group.
He is confident that the low levels of markets will not translate into low levels of sales.
Covington said: 'There is a lot of Isa money being held in cash and waiting to be invested. Everything says we are on the point of the right time to invest.'
Even so New Star will not put a figure on what it hopes to raise.
He added: 'We are doing something that has not been done before: launching a retail investment management company when the market has been very uncertain, so we have not got a target. We are looking to be up among the market leaders over three to five years in terms of sales. It is an interesting time to launch because competitors have things on their minds: Jupiter, Invesco has its merger with Perpetual, Gartmore has been bought, M&G is part of the Prudential, the S&P name has gone. The exception is Fidelity which just keeps marching on.'
New Star also stressed Pease and Miller had investment styles which distinguished them from the majority of their competitors.
Covington said: 'They must live or die by the stocks they pick.'
Mark Skinner, managing director at New Star Investment Funds, said the institutional approach employed by many groups meant investors did not have great choice in terms of fund offerings.
He added: 'The institutional approach leads to the bunching of investment returns.'
New Star's emphasis on retail centres on the far higher profitability available from this business source. Covington said institutional business produced around 10 basis points a year while retail was far closer to 100.
He said: 'We have a retail investment management company and brokers are our core clients. We don't want to be an institutional house that does retail.'
This philosophy is likely to have a large influence on New Star's future expansion plans. The group is looking to bring out up to three more retail funds this autumn, among them a UK income product. Longer term it is keen to make acquisitions. It has £8m on its balance sheet, £125m in what Covington termed 'soft commitments' from existing shareholders, and the group is confident it could raise further money should the right deal come along. Covington estimated New Star could produce a total fighting fund of £300m-£500m.
He said: 'We are here to increase the value of our business and not just to be big. So we would want something with significant retail element to it.
'We think there are businesses around with good underlying performance and we could build our brand behind it. One thing about New Star is we have a very strong management team. We have people who can run money and others who can run the business.'
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