Newspaper article The Evening Standard (London, England)

The Fund That Found Flotation a Big Asset

Newspaper article The Evening Standard (London, England)

The Fund That Found Flotation a Big Asset

Article excerpt


Derivatives dilemma HAVING strongly expressed the view that fund management groups should not be listed companies because they depend too much on a few key individuals, and that the mooted valuation for John Duffield's New Star Asset Management last yearwhen it announced it was heading for the marketwas far too high, it is time to be suitably penitent.

In today's first set of interim figures as a public company, the group has performed brilliantly, fully justifying the faith put in it by those who ignored the comments here and bought the shares.

Net revenue in the six months to June rose 52% to almost [pounds sterling]60 million, and operating earnings were up 91%. The dividend is 4p, and will be not less than 8p for the full year. The pace has slowed a bit since the half year because of market turbulence and then the summer holidays, but overall sales are still moving forward strongly.

The group has assets under management of [pounds sterling]18 billion, and it now accounts for more than 9% of retail investment sales. That makes it the probable number three in the country by volume, and some months it is a lot higher than that.

The key to the success, apart from very astute marketing and shrewd purchase of funds from troubled rivals, is that unusually for a fund management group the customers seem to be doing almost as well as the staff and shareholders.

On a volume-weighted basis, 84% of its funds have done better than the average since their launch or since the group took them over. That may not sound much to the uninitiated, but in fund management it displays two unusual strengths: first a degree of consistency across the piste rather than in just one or two heavily promoted funds "star" funds, and second consistency over time.

The other thing this proves is what a phenomenal business retail fund management is when markets are benign and you can demonstrate a good track record. Not so much fun in a bear market, of course, but Duffield probably expects to sell out to a German bank before then.

A SURVEY published yesterday by the British Bankers' Association forecasts that the global credit derivatives market will grow to more than $433,000 billion by the end of 2008. …

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