Schroders, the UK-based asset manager, warned yesterday that fund managers faced tougher times because investors were becoming more cautious in the wake of the sub-prime mortgage meltdown in the US. Financial Times, Daily Telegraph

Its comments underline the gloom surrounding prospects for the industry this year, raising fears of cost reductions, swingeing job losses and bonus cuts for long-only fund managers.

Schroders said the sub-prime crisis was taking its toll on investors’ risk appetites and pointed to sharp falls in retail flows across the industry. 'We expect these volatile market conditions to persist through much of 2008.'