Profits slide as investors exit New Star
New Star Asset Management, the fund manager founded by City veteran John Duffield, endured a 70 per cent annual profit slide as investors left its UK equity funds in droves.
The group saw last year’s £1.1bn inflows reversed, reporting net outflows of £307m as its total assets under management shrank £3.3bn to £19.8bn.
Investors withdrew £1.1bn of assets, while market falls sliced another £2.2bn off the value of New Star’s funds in the first half of the year. The decline in assets impacted heavily on the fund manager’s fees and commissions, with first-half operating profits falling 37 per cent to £30.3m on the back of a 16 per cent cut in revenues, to £72.8m.
Duffield predicted further troubles for New Star with no let-up to the investor exodus in sight.
He said: “This is a difficult time for most financial services firms and New Star is no exception. We do not expect conditions to improve significantly in the immediate future.”
Duffield has laboured to cut New Star’s costs, reducing staff numbers by attrition and introducing a share plus-cash bonus scheme for certain key staff members.
He has also beefed up the company’s UK equity team with the appointment of two new fund managers and a chief investment risk officer.
But rumours persist that New Star could be subject to a bid approach. Aberdeen Asset Management was thought to be interested earlier this year, although no bid materialised.
New Star shares fell 16 per cent on Friday to 102.25p and the interim dividend was cut to 1p from 4p.