New Star Merges Small Funds: Lower Risk

New Star Merges Small Funds: Lower Risk

New Star has cited a need to diversify and manage risk as the reason for it merging its North American fund with its American Portfolio and its Japan fund with its Pacific growth unit trust.  Mark Skinner, managing director for New Star Investments said “The Japan fund was a single country fund so the merger will give investors access to a broad range of Asian countries, it will therefore be a more diversified fund leading to lower risk for investors”.  Referring to the American funds, he said the American portfolio was a fund of funds as opposed to the North American fund which invested in individual stocks.

The Japan fund and the New Star North American fund are currently worth £5.5m and £7.7m respectively wile the New Star Pacific growth unit trust and the New Star American portfolio currently have £105m and £12.6m in assets under management.

Our view

We suggest it has more to do with cost saving rather then reduction of risk.  People are well aware of the risks they take in smaller, specialist sector investment.

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