Some of the biggest names in British fund management suffered a mass sell-off in their shares yesterday amid heightened concerns that panic-stricken retail investors would rush to withdraw their funds.

The shares rout, fuelled by worries that falling markets would hit the fee income of managers, also took a further slice out of the personal fortunes of some household name fund managers.

The biggest loser yesterday was Schroders, the blue-blooded investment manager still heavily owned by its founding family. More than 25 per cent was wiped off the value of Schroders' shares as analysts at Citigroup reiterated their “sell” advice and said that investors were bound to redeem their assets.

About 70 per cent of Schroders' assets under management are invested in equities. Haley Tam, a Citigroup analyst, noted that the company's flagship funds had fallen by 32 per cent since the end of June and said that investors were bound to flee. Although the performance drop is in line with Schroders' peer group, Ms Tam said: “We expect retail investors to redeem rather than take comfort that the funds have not underperformed.”

Citigroup slashed its revenues forecast for Schroders by 19 per cent and cut almost £30 billion off its estimate for the company's assets under management to about £90 billion by the end of the year.

Ms Tam said it was “quite an achievement” that Schroders' share price had not fallen further — but Schroders was not alone. Shares in Henderson, the fund manager whose profit warning sparked the concern yesterday, slumped 14 per cent, down 10p at 64p, as analysts began to re-rate the company's prospects.

Indeed, on a day when the FTSE 100 fell by a precipitous 8.85 per cent, fund managers experienced a much sharper relative decline. St James's Place, the wealth manager that is majority-owned by HBOS, the mortgage bank, fell 12 per cent. F&C Asset Management slipped 7p to 55p, a drop of 12 per cent.

The only fund manager to buck yesterday's trend was New Star Asset Management. Its shares have been pummelled recently as sustained falls in the FTSE 100 index have raised concerns that it might breach its banking covenant.

Analysts at Arden Partners said late last month that a fall in the FTSE 100 below 4,400 would mean that New Star would have to renegotiate its banking covenants, with costs expected to rise by 1.5 per cent. New Star moved quickly to reassure investors yesterday after the index plunged below that level on two separate days last week. The company said that the index would have to remain below 4,400 for a full 12 months before its covenants came under pressure. Even then it would add only £1 million to New Star's debt burden, it said.

The personal fortune of John Duffield, New Star's charismatic founder, has been ravaged by the decline in New Star shares. Yesterday, they fell just under 3.4 per cent.

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