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New Star Global Equity Fund now available to In...
The New Star Global Equity Fund, a UK-domiciled fund, is now available to international investors via New Star's multi-currency service. The fund is managed by Greg Kerr, who took over in June 2006 and has since posted top decile performance over one year, gaining 24% in sterling terms compared to a 14% rise in the MSCI World Index*.
Greg Kerr employs a disciplined approach to investing, seeking out valuation anomalies. He believes that share prices fluctuate to a far greater extent than is warranted by changes in company fundamentals, often as a result of short-term news-flow. Rather than investing based on following market sentiment, Greg carries out his own extensive analysis to identify the 'fair value' of thousands of stocks. By monitoring the prices of these stocks against their 'fair values', Greg is able to identify attractive investment opportunities.
Below, Greg explains how the New Star Global Equity Fund is currently positioned.
While the long-term case for global equities remains solid, there is an increasingly compelling argument for caution with financial markets exhibiting more risk now than 12 months ago. In such an environment, it is important to hold high conviction and high quality stocks.
A key theme within the New Star Global Equity Fund remains a focus on quality. Growth stocks in particular currently appear best placed to deliver solid long-term returns even if the broader markets go through a period of increased volatility. The fund is avoiding speculative, small, and highly leveraged stocks. Instead it favours large companies that are undervalued relative to their global peers and are attractive investments in their own right.
At the country level, the fund is underweight in Europe, has significant exposure in the US and is overweight in Japan. There are encouraging signs in Europe, such as the election of Nicolas Sarkozy as president of France in May and the continued recovery in Germany. These positives are offset by central bank monetary policy tightening due to inflationary pressures, and lofty valuations reflecting investors' anticipation of improving corporate performance. This is true of other European countries. In Spain, for example, low interest rates have fuelled an economic and construction boom and Spanish banks have been willing lenders. This has created unsustainable imbalances and as a result the equity market is looking overvalued. The fund owns no Spanish stocks.
In contrast, Japan is experiencing 'austerity fatigue'. Historically the Japanese have been big savers but consumers are now expected to open their wallets. Valuations are attractive and the Japanese equity market has underperformed relative to other markets. The improved competitiveness of Japanese companies has also aided diversification in its trading relationships. Asia is now the key driver of Japanese exports, with the US and European markets less important. Completing this positive outlook is the currency: the yen is currently particularly attractive relative to other major world currencies.
Globally, nervousness in the market is only just beginning to affect corporate behaviour. Such conditions, when they arise, can, however, provide good investment opportunities. Some of the companies that have been adversely affected by the problems in US sub-prime lending market are a good example of this. Earlier in the year the fund used the nervousness surrounding US sub-prime mortgages to buy into IndyMac and Countrywide Financial and these investments have contributed to the fund's strong performance.
Looking ahead, the fund's defensive stance may prove overly cautious but owning high quality, under-valued companies is a sensible strategy at this point in the cycle. While the potential for further gains remains across the global equity universe, after years of solid returns caution rather than greed may prove the most rewarding approach.
*Performance mid-mid, accumulation shares, net income reinvested to 29/06/07. Source: Lipper
For further information, please contact Polhill Communications (0207 655 0540)
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NOTES TO EDITORS:
Past performance is not necessarily a guide to future performance. The opinions expressed here represent the views of the fund manager at the time of preparation and should not be interpreted as investment advice.
IMPORTANT INFORMATION
This document is for professional investors, professional advisers and other financial institutions only and should not be provided to or relied upon by private investors.
Past performance is not necessarily a guide to future performance. The value of investments and any income from them may fall as well as rise and investors may not get back the amount originally invested. The value of investments may also increase or decrease as a result of changes in exchange rates between currencies. Investments involve certain risks, as described in the relevant prospectus. Any opinions expressed in this document may vary without prior notice and do not constitute investment advice.
This document should not be distributed to any third parties and does not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Distribution of this document and the offering of shares in certain jurisdictions may be restricted and accordingly persons into whose possession this document comes are required to inform themselves about and to observe such restrictions. If this is the case, these funds cannot be the subject of active marketing in your jurisdiction.
Full details of the fund can be found in the prospectus or Offering Document, in the case of Hong Kong. Any investment decision must be made solely on the basis of the information contained in the prospectus/Offering Document, which is available on request from New Star. The simplified prospectus and most recent annual and interim reports are also available upon request. The fund mentioned in this document is not registered for distribution except as noted below.
The New Star Investment Fund OEIC and the New Star OEIC, (UK-domiciled), the ACD or Unit Trust manager as applicable, New Star Investment Funds Limited, and the Investment Adviser, New Star Asset Management Limited, are authorised and regulated in the UK by the Financial Services Authority.
The New Star Global Equity Fund, a sub fund of the aforementioned umbrella funds, is registered in Italy with the Banca d'Italia and has been registered for distribution in France with the Autorité des Marchés Financiers. The fund mentioned in this document is not registered for distribution in the Netherlands. As such, the units or shares may only be offered to professional persons as referred to in the Regulation ex article 14 of the Act on the Supervision of Collective Investment Schemes as set out in the Ministerial Decree of 9 October 1990, as amended from time to time. This document has not been verified or approved by any relevant supervisory authority in the jurisdictions where the Fund is registered.
The shares referred to in this document have not been and will not be registered under any United States securities laws, and, except in a transaction that does not violate the United States securities laws, may not be directly or indirectly offered or sold in the United States of America, or any of its territories or possessions, or areas subject to its jurisdiction or to or for the benefit of a United States person.
The manager of the fund is New Star Asset Management (Bermuda) Limited. The fund custodian is State Street Custodial Services (Ireland) Limited. New Star Global Investment Funds PLC is authorised by the Irish Financial Services Regulatory Authority. Issued by New Star Asset Management (Bermuda) Ltd.
