Shares in St James's Place plumbed near-four year lows today after the specialist wealth manager revealed that volatile stock markets had wiped £175.7 million off its projected investment returns over the past six months.

The shares slide, amid heightened worries about St James's exposure to equity markets, came despite it delivering a better than expected set of results for the six months to the end of June.

The £17.2 billion fund manager also held on to an ambitious target of increasing new business by 15 per cent to 20 per cent a year over the longer term.

Shares fell almost 6 per cent, before recovering later in the day. They were down 7p at 202.5p, a fall of 3.34 per cent, in early afternoon - lows not seen since November 2004.

"The outlook for the business is hugely dependent on the outlook for the investment markets," said Barrie Cornes, analyst at Panmure Gordon.

Mr Cornes said that otherwise St James's first half figures were "solid", with operating profit slightly ahead of expectations.

St James's Place specialises in selling life and pension products to well-heeled customers through its network of self-employed advisers. Most customers will be high-rate taxpayers, who would also qualify to pay inheritance tax.

Mike Wilson, the chairman, denied that St James's Place was over-exposed to the performance of the equity markets. He noted that the firm had launched, among other things, a corporate bond and "cautious managed" fund to help diversify its fund offerings.

Operating profits for the six-month period fell 5.4 per cent to £114.2 million, with new business profits down 8.7 per cent at £65.3 million.

Total new business rose 3 per cent to £220.7 million, helped by a record second quarter that notched up £122 milllion of sales, the highest ever.

Andrew Croft, the finance director, noted that operating profits this time around were skewed by a one-off tax benefit last time of £8.9 million.

Both men said they were very happy with St James's performance in the first half. Mr Wilson said that if current conditions continue, new business growth in the second half would be similar to that in the first.

Profit margins at St James's Place, which is 60 per cent owned by HBOS, the mortgage lender, fell to 29.6 percent in the first half, down from 33.7 percent a year earlier. This is the first decline in four years.

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