New Star pursues distributors in Asia

Cobus Kruger explains the asset-management firmÆs institutional and wholesale strategy.
New Star Asset Management, a $35 billion fund house based in the United Kingdom, has hired a director of its mutual funds business, Cobus Kruger, to help extend its global distribution relationships to Asia and other regions.

Although the firm has a strong retail brand name in the UK, where it works with fund aggregators and financial planners, it prefers a purely institutional or wholesale approach elsewhere. Life insurance companies are an important plank and KrugerÆs job is to develop and nurture these relationships internationally.

A native of South Africa, he has worked for funds of hedge funds and life insurance companies before New Star offered him a role in December 2005.

Fund managers can interact with life insurance companies by managing their money on a discretionary account basis, by linking funds to insurance policies, and by creating and running investment solutions for insurers. Ideally, Kruger says, a fund manager will do all three for a life insurance company. But this requires an intimate understanding of the insurerÆs business and its executives in product development.

Since joining, he has surveyed the insurance industry and successfully courted three firms to enter a global relationship: Friends Provident International, Scandia and Zurich International. Next he identified four fund products that New Star would like to distribute through these insurers per region, which includes the Far East, the Middle East, Europe and Africa; the firm isnÆt active in the Americas, Australia or Japan at present.

ôWeÆve brought Asia into the fold,ö he says, noting the firm is also building a number of global relationships with private banks, including Fortis, to participate in their multi-manager programs.

Private banks involve a different business model, however; once a fund house is included in a platform, assets can flow in quite quickly (and vanish should the fund house be removed). Insurance companies require a more patient approach, with 12-18 months of groundwork before assets begin to build.

The funds that New Star wants to introduce to its distributors in Asia include an Asia ex-Japan equities strategy, and a UK direct commercial property fund that is hedged into US dollars. These funds are already operational. New Star plans to introduce a sterling-denominated, absolute-return equity fund focused on financial companies, with structures denominated in dollars or euros. And the fourth strategy to be introduced to Asia is an alternatives-focused fund, but Kruger could not reveal details yet.

The overall thrust is to appeal both to expatriates in Asia as well as local investors, with a mix of different investment stories that fit both New StarÆs strengths and distributorsÆ needs.
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