UK fund manager New Star Asset Management said its funds have declined by 12% since the start of the year.

The decline is partly due to client withdrawals in the wake of the credit crunch. However, after the recent poor performance, shares bounced back up 2.8 pence, or 3% to 87.8p.

New Star said its underlying pre-tax profit for the year to 31 December came in at £98.1 million, up from £72 million in 2006. This reflected strong growth over the first six months.

Client withdrawals in the wake of last summer's credit crunch had reduced funds under management to £20.3 billion by 18 March this year, down 12% from £23.1 billion at the end of 2007.