New Star Asset Management issues profit warning, cuts dividend

UK fund manager New Star Asset Management, which manages the New Star UK Property Unit Trust, cut its final 2007 dividend to 5 pence from a previous 9 pence per share, as it pointed to the uncertain market situation and its desire to maintain its financial position.

'We are not optimistic about the outlook for 2008,' New Star said in a statement. 'As a result both of depressed market conditions and the poor relative investment performance of some of our principal products in 2007, there may be further net outflows of assets, at least during the first half of 2008. As a consequence, operating profits are expected to be significantly lower in 2008 than in 2007.'

New Star said it had suffered from the sharp downturn in the UK commercial property market, as well as the fact that some of its European and UK mutual funds were badly positioned for the combination of the credit squeeze and high natural resources prices experienced in the second half of 2007. New Star had already given investors an indication of its difficulties. In December, the value of the flagship New Star UK Property Unit Trust was reduced to £1.7 bn (EUR 2.3 bn ) from £2.1 bn seen just in July.