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Fund management group, New Star, is to consolidate four of its funds into two. Subject to FSA and investor approval, the £5.5 million New Star Japan Fund will merge into the £105 million New Star Pacific Growth Unit Trust, which is managed by Ian Beattie. Meanwhile, the £7.7 million New Star North American Fund will merge into the £12.6 million New Star American Portfolio, which is managed by Mark Harris.
Assuming approval, the mergers will take place on June 13th.
Mark Skinner, managing director, New Star Investment Funds, said: "The New Star Japan Fund and the New Star North American Fund were acquired from Edinburgh Fund Managers in 2003.
"By consolidating these small portfolios into more established funds with broader remits, New Star is seeking to improve performance for investors. Investors in these funds should be well served by Ian Beattie and Mark Harris."
Unlike the New Star Japan Fund, which is a single country fund, the New Star Pacific Growth Unit Trust is invested across a broad range of Asian countries and can, therefore, access a greater number of stocks. Consequently, it has the ability to invest in some of the world's major growth markets including China, Hong Kong, India, Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam. Hence, it is a more diversified fund and the merger should, in theory, lead to lower risk for investors.
The IMA Asia Pacific excluding Japan sector has outperformed the IMA Japan sector over one, five and 10 years and New Star believes the broader Asia Pacific region should continue to offer stronger growth prospects going forward.
Meanwhile, the New Star American Portfolio is a fund of funds as opposed to the New Star North American Fund, which invests in individual stocks. Investors should benefit, claims New Star, from a broader spread of underlying investments and a greater degree of flexibility in the New Star American Portfolio.
A fund of funds approach accesses the expertise of several specialist fund managers and can shift style more quickly than a fund that invests in a portfolio of individual stocks. This is a key advantage when economic conditions and market circumstances change.
The New Star American Portfolio is predominantly invested in North America but has a more expansive geographical remit than the New Star North American Fund. From time to time, it may invest in funds covering Central and Latin America and this additional diversification should lead to lower risk for investors.
13 May 2008 © Moneyextra.com
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