New Star's £5m divorce manager steps down

Alan Miller, the multi-millionaire fund manager who was earlier this year ordered to pay his former wife a divorce settlement worth £5m, has been put on sabbatical until the end of the year by his employer, New Star Asset Management.

Mr Miller is to step down from running New Star's UK Hedge Fund, which he has managed since June 2002, and will be replaced by Guy Crossfield, a rival whom the fund manager has poached from Investec.

Mr Miller, who also serves as joint chief investment officer at New Star, has come under pressure this year after taking a dispute over his divorce to the House of Lords. He lost the high-profile case in May and was ordered to hand over £5m of his estimated £35m fortune to his former wife, Melissa.

However, while the case attracted unwelcome publicity for New Star and its founder, John Duffield, insiders say that it was the fact the the divorce row coincided with a period of serious underperformance from UK Hedge that has led to his leave of absence.

The fund has produced very strong returns since Mr Miller took over, but this year has suffered a series of reverses, with the value of large stakes in companies such as the troubled Betonsports plunging.

John Duffield, who set up New Star five years ago after selling off his previous asset management business, Jupiter, has a reputation for taking swift action when performance slips at any of his funds.

Mark Dampier, the head of investments at the independent financial adviser Hargreaves Lansdown, said: "As a fund manager, you must be 100 per cent focused on the funds you run, and if you have anything going on, personal or otherwise, it is a distraction."

Insiders at New Star insist Mr Miller will be welcome to return to work in January in a new role. However, the fund manager does not yet know what this will entail and he will not be given back his existing fund, which has already been allocated to Mr Crossfield.

New Star was floated on the stock market last year for £600m, creating instant millionaires among its staff and adding to the wealth of senior fund managers such as Mr Miller.