New Star Asset Management, the troubled London funds house, reported a substantial fall in profits over the first half of the year, leading to a 16% drop in its share price this morning as it revealed less than a third of its funds had produced above-average returns over the period.

New Star's net revenue was £72.8m (€90.3m), 16% down from £86.5m over the same period last year, according to its half-year report published today. Its operating profits fell 37% to £30.3m, down from £48.1m for the first half of last year. Its assets under management also fell over the period by 14% to £19.8bn, of which £1.1bn was due to net outflows, and £2.2bn was due to market falls and fund performance.