New Star manager sticks to his guns

New Star Asset Management's fund of trusts manager Paul Craig is holding back from making changes on his four portfolios, despite admitting his defensive stance has not protected him from negative returns.

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Mr Craig said he would stick with his choice of underlying managers and asset allocation, although he said discounts on closed-end funds had widened beyond his expectations.

He said: "While we positioned the portfolios defensively, it hasn't worked out quite as defensively as we thought it would, partly as a result of increasing discounts to NAV for closed-end funds. We still like the assets we own and the managers we've backed, and we are standing by them."

Over the past three months Mr Craig's £95.4m Diversified Absolute Return fund has lost 20bps against a rise in Libor, while his £99m Global Strategic Capital fund lost 1.2 per cent against an average rise of 5.7 per cent in the IMA Active Managed peer group.

Mr Craig's £62.8m UK Strategic Capital and £52.3m UK Strategic Income funds have also lost money over the period.

He added: "We are expecting volatility to increase in the short term, but the portfolios are quite diverse."

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