BlueBay attracts $2.2bn new money

Investors' fragile confidence in fixed income asset manager BlueBay was given a boost yesterday when the group issued its fourth quarter trading update, which said that it had attracted $2.2bn of new money.

The group announced that assets under management had risen to $21bn during the three months to 30 June which, “reflects the both the strength of BlueBay's specialist franchise and the growing opportunities that investors see in credit markets at this point in the cycle,” said the firm's chief executive Hugh Willis in a statement.

Despite Mr Willis's upbeat assessment, yesterday's announcement comes exactly a month after BlueBay issued a profits warning, saying that performance fees for the full financial year will be “lower than previously anticipated”.

The market reacted positively to yesterday's news, with the stock closing the day up 15.1 per cent at 219p, having fallen 87p since the profits warning. Andrew Mitchell, an analyst at Fox-Pitt Kelton, argued that the market would take comfort from the update.

“There is nothing in the statement that is out of line with what was announced in June,” he said. “That was certainly a disappointment and so there was a sense of relief. Investors should be content that what BlueBay has said is consistent.”

The company stated that performance fees generated in the six month to the end of June totalled £5.2m - higher than the predicted £4m last month - which will contribute to a yearly total of £23.9m, down from £48.2m last year.

Analysts at Numis said that the market's reaction to last month's profit warning had been too severe and that, “despite challenging conditions persisting in credit markets in the near term we do believe that the long term structural trends remain positive for BlueBay.”

The group conceded that market conditions remain difficult. Experts at Citigroup say that the prospects for long only funds remain poor, as a result of the credit crunch. BlueBay has launched two new long only funds in the last quarter: an investment grade Libor fund and an emerging market corporate bond fund. The company declined to be interviewed, saying that it would announce its preliminary results on 18 September.