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Shares in BlueBay Asset Management fell over 18 per cent to 269p after the fixed income fund manager warned that full-year profits to the end of June this year will be lower than expected. BlueBay blamed difficult trading conditions that saw performance fees in the first five months of the second half collapse to £4m, down from £18.7m in the first half.
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If there is no significant upturn in June, BlueBay expects pre-tax profits to miss earlier market estimates of £60.6m, warning that the full-year performance will be broadly similar to last year, when it has made profits of £51.6m. But BlueBay continues to attract demand for its range of fixed income credit funds - products based largely on European corporate debt saw net inflows of $3.5bn (£1.8bn) for the first five months of the second half.
In a separate development, BlueBay expects to complete a share conversion on its $2.7bn Value Recovery Fund. Under the terms of the deal, shareholders will be prevented from making redemptions before July 2009. In return, BlueBay will reduce its management fee on the fund to 1 per cent and performance fees to 15 per cent.
Despite operating in the toughest credit conditions for some time, BlueBay is at worst trading sideways from last year, and investor confidence remains strong because it continues to pull in fresh funds. Still, with little improvement in global credit markets in the foreseeable futures, the shares are fairly priced.
Last IC View: Good value, 290p, 20 Feb 2008
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
