NEW STAR INVESTMENT FUNDS

Some clients may have read the reports in the press regarding New Star.  We have a number of clients holding New Star funds and hopefully this article will give you a greater insight into New Star’s current situation.

It is important to differentiate between New Star the company and the funds currently managed by New Star.  For your information, New Star is a company which is quoted on the UK stockmarket and over the last 12 months, their share price has fallen dramatically.  In addition, the company has built up a high level of borrowing – a combination which has caused the City a great deal of anxiety.  In order to restore the City’s confidence in New Star, the company has agreed in principle with its creditors – the banks, to exchange almost all of their loans to the company for equity in New Star.  When the transaction is completed, New Star’s loans will be reduced from £260 million to £20 million and as the company has £30 million in cash on its balance sheet, the company is hopeful that this will bring back stability to the business.

Fund Performance
New Star accepts that a number of their funds have not performed well over the last 2 years. The company has hired new fund managers and is looking to augment their management team following the departure of Stephen Whittaker and John Duffield.  If the company shares are taken over by the banks, further fund manager changes will undoubtedly follow. In the interim, we are recommending to our clients that they remain invested. Clients are reminded that any money invested with New Star is not under any form of threat. In the event of any investment company going bust, funds held in FSA regulated funds are ring fenced from the fund management companies and are therefore protected. The regulations protect 100% of the first £30,000 and 90% of the next £20,000 of any individuals investments.