New Star Asset Management, the credit crisis-hit fund set up by star trader John Duffield, warned yesterday that the trading environment remains challenging but added that performance of some of its funds is improving. Daily Telegraph

The fund manager, which first warned of significant investor withdrawals in March, said assets under management fell by a total of 6% in the first quarter.

Investors withdrew £700m and net assets under management slipped from £23.1bn to £21.7bn. But New Star said net outflows had slowed since its initial warning, the investment climate had not deteriorated further and performance at some funds had improved.

'The trading environment remains challenging. Against this background New Star is trading in line with our expectations,' said the company. 'The investment performance of our European Growth Fund in the year to date is much improved. Our UK investment performance remains mixed.'