fund of funds Portfolio will include all of new star's hedge funds
New Star is to launch a fund of its own hedge funds with a 10%-15% target return, run by head of alternatives Charlie Tritton and deputy CIO Gregor Logan.
At inception in June, the New Star Managed Hedge Fund will invest in all seven of the company's public hedge products, making it the only open route to Alan Miller's UK long/short fund, the New Star Hedge Fund.
The fund will be a Bermuda-based open-ended fund with an initial charge of 5.25% and a minimum investment of $200,000 or £100,000. There will be no annual charges - New Star will make its money from the fees paid on the underlying funds, which are 1.5% pa with a 20% performance fee. The initial offering period will last until 18 June with monthly dealing afterwards.
The fund is set to be keenly watched by investors in the underlying funds, as it represents the company's predictions on the performance of its own underlying funds, combined with a judgement on the markets.
And New Star is touting as a selling point for the fund its ability to judge its own managers' performance.
"The great advantage here we have is that we have immense amounts of information on the underlyings," said Tritton. "We are aware of all of the risks in it and have the capabilities of hedging it out."
The heaviest weighting at launch will be with Miller's UK fund and Michelle Sander's Japan fund, which together will make up almost half the portfolio.
Tritton explained: "It's actively managed and tries to predict which funds are going to perform best and is also able to hedge out some residual market risk if necessary.
"We do this by taking into account macro environment factors plus the outlook for each individual fund, plus some additional quantitative data."
This quantitative process in essence looks at momentum and mean reversion to predict changes in performance.
Aside from making predictions about individual managers, Tritton and Logan will also be able to use futures and options to hedge out any residual market risk.
This launch comes on the back of the recent opening of the UK Leaders Fund to public investors.
The £5m fund, launched in-house with seeding in April 2002, will keep about 70% of its assets in FTSE 350. Between inception and 31 January 2004, the fund returned 31.25%, and 24.35% in the past 12 months.
The fund is Dublin-listed and Bermuda-domiciled. It has a minimum investment of £100,000 in its sterling class - a dollar class is to be added soon.
Developed by industry-wide group
Joined in 2002
'Educate clients' children'
Raised £15m earlier this week
From 8pm Friday 19 October