2006 began well for the New Star Property Unit Trust, which for the first time became an eligible investment for ISAs, PEP transfers and Child Trust Funds. The breakthrough followed Parliamentary approval at the end of December 2005 of new regulations enabling Non-UCITS Retail Schemes (NURS) to be included in tax-efficient wrappers such as ISAs and PEPs. The Property Unit Trust converted to a NURS structure in January following unitholder approval.
In March, four of New Star's funds won highly-coveted category awards at the Lipper Fund Awards UK 2006. This was the highest number of individual fund classification winners over the key three-year period. The funds in question were the New Star Fixed Interest Unit Trust, managed by Theo Zemek, the New Star Global Financials Fund, managed by Guy de Blonay, the New Star Managed Portfolio, managed by Mark Harris and Craig Heron, and the New Star UK Strategic Income Unit Trust, managed by Paul Craig. Awards are given to funds that demonstrate the best risk-adjusted returns over three years in their respective fund sectors.
At the end of March, New Star unveiled its 2005 annual figures, showing operating earnings [1] up 82% at £46.1 million on turnover 44% higher at £99.6 million The figures showed that the company was third for net retail sales during 2005 [3], a year in which assets under management had increased from £10.7 billion to £16.8 billion. In addition, New Star announced an intention to pay a total dividend of not less than 5p per share in respect of 2006, compared with a 3p per share forecast at the time of the company's Alternative Investment Market admission in November 2005.
The 2005-06 ISA season ended strongly for the company, with the New Star Property Unit Trust proving particularly attractive to retail investors. As a result of strong fund inflows, the fund exceeded a landmark £1 billion of assets under management, making it the second largest direct commercial property unit trust in the UK [2]. Due to the fund's considerable growth, from £144 million in size when it was acquired from Edinburgh Fund Managers in October 2003, efforts were made to strengthen the in-house property team. Consequently in May, Gavin Potts, formerly head of property at Pavilion Asset Management and MGM Assurance, was appointed to oversee the fund's acquisitions process, reporting to the fund manager, Roger Dossett.
Later in the month, New Star Investment Funds announced the launch of the New Star Tri-Star Unit Trust, which offers investors exposure to the three main asset classes of UK equities, bonds and commercial property in a single fund. Managed by Gregor Logan, New Star's joint deputy chief investment officer, and accessing the fund management skills of Stephen Whittaker for UK equities, James Gledhill for bonds and Roger Dossett for commercial property, the fund was launched in response to strong demand from financial advisers for commercial property exposure within balanced portfolios.
[4] New Star Asset Management's first annual meeting as a public company was held on 24 May. John Duffield, the chairman, told shareholders that the company continued to make strong progress and was on course, subject to movements in financial markets and to external events, to achieve a significant advance in operating profits during 2006. Assets under management had risen to approximately £18 billion (at 23 May 2006) while net inflows into UK retail funds during the year so far had risen 21% to £528 million and net inflows into international retail funds had increased to £159 million, compared to £53 million over the same period in 2005.
Notes
[1] Before tax, interest, exceptional items and amortisation of intangible assets
[2] Source: Lipper (at 30 June 2006)
[3] Source: IMA (1 January 2005 to 31 December 2005. Gross sales less repurchases)
[4] Forward-looking statement: This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of New Star Asset Management Group PLC. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.
Past performance is not necessarily a guide to future performance.