RAB profits to tumble as investors pull out cash

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The hedge fund manager, which got its bet on a recovery in Northern Rock shares badly wrong, told shareholders at their annual meeting: "Our current expectation is for first-half earnings in 2008 to be significantly lower than those for the first half of 2007."

Last year RAB booked a 50% leap in first-half profits to £22 million before the credit crunch bit and lowered returns in the second half, leaving full-year profits flat at £51 million.

But RAB's feted stock-picking chief executive Philip Richards was still able to pay himself a £7.7 million bonus plus a charitable donation allowance of £3.5 million for the year.

RAB investors - who include Britain's richest man, Lakshmi Mittal, and who have seen the shares more than halve over the past year - will also be spooked by the underlying performance of RAB's funds under management. The firm said those assets fell 12% from the start of the year, from $7.24 billion to $6.34 billion.

RAB admitted that was due to the poor performance of its funds plus investors taking their money away. Net fund withdrawals amounted to around $450 million (£225 million) over the last four months.