While private investors holding New Star funds might be tempted to get out as soon as they can, the message from the experts is sit tight.

Mark Dampier, head of research at Hargreaves Lansdown, the independent financial adviser, said: “Right now we would repeat the catchphrase of Corporal Jones from Dad’s Army: don’t panic.

“John Duffield will not be happy with the performance of his fund managers and he will no doubt be making changes. It is worth waiting to see how those changes work out. Mr Duffield has an excellent track record of picking and developing good fund managers and most people wouldn’t bet against him turning things round.”

He said switching from New Star to another manager now might be a case of jumping from the frying pan into the fire. However the current problems at the fund group reinforce the general principle that investors should not have all their money in one fund or with one fund manager.

Brian Dennehy of Dennehy Weller & Co, also urged New Star investors to hold on, despite the recent disappointments they have suffered.

He said “There has been some poor performance by New Star funds. The UK property fund has attracted most of the headlines after falling sharply but that at least was in line with other funds in the property sector. More worrying still for John Duffield will be the poor showing of some European and UK funds, which have underperformed against their rivals.

“There are probably a few too many funds and a few too many fund managers but Mr Duffield will be sorting that out. We think there are still plenty of positives at the fund group and would urge people to hold on because we think New Star will recover from this.

“If you are a really brave investor and want to bet on John Duffield turning things round you could sell some of your New Star funds and buy shares in the New Star fund group.”

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