Its transfer last month from AIM to the London Stock Exchange’s Official List was expected to have boosted demand for shares in New Star.

In contrast, its stock has fallen 12 per cent since it last updated investors at its May annual meeting, and nearly 7 per cent since the beginning of this month alone.

That it has reflects concerns that the fund manager is overreliant on inflows to property unit trusts in which investor interest is beginning to wane.

One harbinger of their incipient unpopularity is New Star’s move this month to switch the pricing of units in its £2.1 billion UK Property Fund from offer to bid in an attempt to discourage outflows.

But, as Citigroup points out, the fund accounts for only 9 per cent of the group’s assets under management and 17 per cent of its sales during the first half.

Much more important is the performance of world stock markets: 73 per cent of New Star’s assets are tied up in equities.

With the Dow Jones industrial average settling above 14,000 on Thursday, equity investors appear to be shrugging off warnings of contagion from the sub-prime debt markets.

That they have is significant for New Star and suggests that, at 12 times next year’s earnings, against 14.8 times for the UK fund management sector, its shares are undeservedly cheap.

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