Chelsea downgrades New Star Global Financials

The fund is now rated "Hold" rather than "Buy."

Chelsea Financial Services managing director, Darius McDermott said: "On hearing the news of De Blonay's departure, I immediately downgraded this fund from a "Buy" to a "Hold". I was a big fan of De Blonay's investment process and as he was the key manager on the fund, I felt I had no other choice but to downgrade the status to a hold immediately."

"This development raises some concerns about the previously relatively seamless integration process and leaves a major dent in Henderson New Star’s retail ambitions. De Blonay was a deal breaker when Henderson acquired New Star last year – and his departure will no doubt be galling for Henderson boss Andrew Formica. Worse still for Henderson, the move means that rival Jupiter will, when De Blonay joins in January 2010, become the leading financials fund manager in the UK."

Last month McDermott told Trustnet that financial funds can be a good long-term option, though as a satellite rather than core portfolio holding, and his preferences were Jupiter Financial Opportunities and New Star Global Financials.

De Blonay also runs the Henderson Financial Opportunities investment company, and the management of this and open-ended New Star Global Financials will be assumed by Emily Adderson, who has been assistant fund manager on the funds for three years.

The investment trust, which has an independent board, has the option of ending its management agreement with Henderson New Star, a spokesperson for the fund management group said: "The board of the investment trust are confident in Emily’s ability to run the trust."

Last month the investment company opted to change its investment mandate to a global basis rather than a European basis, upon the recommendation of De Blonay. Henderson said the new investment mandate will continue under Adderson’s management. 

The investment company had also indicated that it is preparing an equity issue to increase its size, though this will rely on investor interest which may be dented following De Blonay's departure. Today the investment trust's share price closed down 1.25p or 3.11 per cent at 39p.

Meanwhile, McDermott expects De Blonay will be taking up some of Jupiter financials manager Philip Gibbs' mandates. He said: "Jupiter might remain steadfast in its ambiguity as to what precisely De Blonay will be doing but it won't surprise me in the slightest if we see him taking over some of Gibb's exiting mandates, if not the Jupiter Financial Opportunities fund itself, as Gibbs increases his responsibilities within the firm – which include the impending launch of two new funds."