New Star Asset Management is launching a new closed end London-listed investment company targeting an absolute return of LIBOR plus 600 to 1000bps.
Ravi Anand, New Star's head of structured products said: 'New Star Absolute Return brings together all of New Star's hedge fund talent in one fund. The Fund benefits from active management at all levels, a focus on risk management and a single layer of fees. We have been marketing the Fund for the last few weeks and it has received a fantastic response from potential investors who see the benefits of diversifying their portfolios into absolute return strategies and New Star's strong track record in this area'.
The New Star Absolute Return Fund will be managed by Charles Tritton, New Star's head of alternative investments, who will actively allocate to a range of New Star hedge fund strategies on a risk budgeted basis.
The portfolio will seek to generate alpha through active stock picking on both long and short positions but with a limited market exposure. The Fund's typical portfolio composition is expected to provide diversification across approximately 40 industry sectors and in excess of 500 individual positions.
At 30 June 2006, New Star managed USD 2.2 billion of hedge fund assets, including approximately USD 0.6 billion in the same strategy as the Fund. New Star's nine existing hedge fund strategies are managed by 15 experienced fund managers with an average hedge fund investment experience of 5 years.
For the 3 years to 31 May 2006, New Star's hedge fund strategies generated a compound annual return of 13.5% with an annualised volatility of 6.4% compared to a return of 8.4% and volatility of 5.9% for the average London listed fund of hedge fund.
The Fund is a Guernsey closed end investment company, which will be listed on AIM and the CISX. It will issue two classes of share, a growth share providing a capital only total return and an income share which will pay an annual dividend of 5% on an initial investment of 100p with the potential for capital growth.
The Fund is targeted at institutional investors and sophisticated and high net worth individual investors. The minimum investment is GBP 37,500 through a Placing which closes on 21 July. Following listing, the shares will be ISAble, PEPable and SIPPable.