Fund Objective

To seek long-term capital growth.

View on Past Performance

September was an exceptionally volatile month for equity markets as investors wrestled with the effects of high-profile financial failures on both sides of the Atlantic and the likelihood of concerted government intervention to restore health to the global financial system.The FTSE All-Share Total Return Index lost 13.2%* while the New Star UK Growth Fund fell by 16.5%*. Resources stocks, to which the fund had little exposure, suffered particularly badly but there were also widespread losses in sectors in which the fund had significant holdings.The major disposals were British Energy, which received a bid from EDF, and Centrica, which had held up well during the difficult markets. The funds raised were invested in the high-yielding Royal Dutch Shell group and the oil services company, Wellstream.Market turbulence continued in early October, throwing up value among stocks within the portfolio. The banking sector bail-out on both sides of the Atlantic and the concerted effort to reduce interest rates were positive but the nervousness in financial markets may take a while to dissipate.

Future Expectations

Among the few bright spots, the Lloyd's of London insurance group, Amlin, put on 10.7% while two other insurers, Hiscox and Lancashire, were relatively resilient, shedding 1.5% and 2.1% respectively. All three are beneficiaries of the virtual collapse and partial nationalisation of the US insurance group, AIG. This removed significant capacity from the industry and will likely lead to a firming of premium rates. HSBC, meanwhile, rose 4.1% as investors warmed to its perceived defensive qualities.

Fund Details