New Star Asset Management – the fund management company founded by John Duffield after his acrimonious departure from Jupiter, the company he sold to Commerzbank – has proved its pulling power by raising $180 million on its debut in the capital guaranteed hedge fund arena. This is a record for a single manager equity guaranteed hedge fund.
New Star already runs one hedge fund – a 180 million fund launched in 1997 and retrieved from Jupiter in February last year. The non-guaranteed New Star Hedge Fund, the largest specialist UK long/short equity fund, has achieved a compound annual return of 30 per cent over the last five years. But this new fund is the first product launch for New Star International Products Limited, a Bermuda-registered arm of the New Star Asset Management Group Duffield founded in June 2000.
The New Star Capital Guaranteed Fund is designed to provide investors with absolute performance over a five-year investment period through active stock picking, primarily of UK equities. It will be advised by Alan Miller, New Star’s Chief Investment Officer, and Tim Steer, a UK equity analyst who has previously worked at Collins Stewart, Merrill Lynch and HSBC.
This latest success proves the old adage that all publicity is good publicity. Since splitting from Jupiter, Duffield has had high profile disputes with both Commerzbank and his former colleagues at Jupiter over the splitting of an investment trust he took with him. But in the year since New Star started in earnest, the group has taken in $2.6 billion, its UK open-ended retail fund launch drawing in 30,000 punters and $350 million.
The capital guarantee to the new fund is provided by HSBC, which had toraise its support from an initial $150 million, and pledge to increase it further if necessary. It ensures that at least $100 per share will be repaid to shareholders in December 2006. HSBC Investment Bank is providing brokergae services to the fund, while Deutsche Bank and CSFB are sharing the prime brokerage duties. Offshore administrator to the fund is Deutsche International In Dublin. Whilst both prime brokers already service the New Star Hedge Fund, Bank of Bermuda has lost the administration role to the giant German Bank.