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UK Fund Manager Gets Green Light From Hong Kong SFC

by Phillip Morton, Investors

16 June 2003

According to a report from FinanceAsia last week, UK based fund management firm New Star International has recently been given the go-ahead by Hong Kong's Securities and Futures Commission to begin marketing an umbrella fund of equity and fixed income products in the territory.

New Star was founded in 2001 by John Duffield, former chairman of Jupiter Asset Management, and was born of the acquisition of the Bank of America's London asset management arm, known as World Invest. Earlier this year, New Star bought a stake in Aberdeen Asset Management's UK retail business, bringing its total under management to $6 billion.

New Star has been seeking rapid expansion of late, and is reportedly looking to involve itself in markets that have a similar regulatory environment as the UK. In addition to the Hong Kong operation, the firm is promoting a similar umbrella fund in Malta and intends to move in South Africa in due course.

The firm's managing director, Phillip Goldsmith, told FinanceAsia that the Hong Kong market in the long term is potentially very profitable, although he expects a slow take up of New Star's products in the early stages. "By global retail market standards, Hong Kong is sophisticated," Goldsmith commented, continuing: "Inflows to bonds are rising, just this past quarter saw $1.2 billion go into bond funds. And Hong Kong investors will start to look at equities again." New Star is looking to raise between $100 and $200 million in the next two years, he revealed.

The structure of the New Star Umbrella consists of one bond fund, and six equity funds. The firm is hoping for a large take-up in bonds, and is offering the flexibility of a switch to equities later at no additional cost. The Strategic Government Bond Fund invests in both established and emerging market debt and is targeting a performance of 4-5% net of costs.

As a so-called 'boutique' fund, New Star has greater flexibility enabling it to invest in more mid-cap stocks. "Most of the funds authorized in Hong Kong are from the mega-players, but there are few boutique managers that can do what we do," claimed Goldsmith.

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