New Star Sterling Bond - Downgrade

By ROBERT HARLEY 22/10/2008

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The New Star Sterling Bond Fund has experienced an abrupt reversal of fortune over the last 12 months, falling from second to tenth percentile in the peer group rankings. In particular the extent of this relative under performance has been a disappointment; with hindsight the manager was far too aggressive in his initial move into the subordinated financials sector. As a result of this underperformance the fund is also experiencing a small drip, drip of redemptions which can complicate the management of the portfolio given the more illiquid market conditions we are currently experiencing. However, at the same time we believe the positioning of the fund may come good for the manager now that the government has made known its intentions to support the support the banking sector, consequently it could be a mistake to sell now. That said the fund structure remains a higher risk option. We have reduced our rating to 3 stars.

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Source: Financial Express