Hedge fund holding company HFA Holdings expects its earnings before interest, tax, depreciation and amortisation (EBITDA) over the six months to 31 December 2011 to come in between US$3 million and US$4 million.

This would mean a drop in EBITDA of between 60 per cent and 70 per cent compared to the US$10.1 million over the same period in 2010.

The decrease in underlying profit was due to a significant drop in product investment performance fee revenue as a result of the volatility in the global markets, HFA said.

HFA also blamed the lower forecast result on an increase in non-cash equity settled transaction expenses, resulting from performance rights issued to Apollo Group, and executives and other staff of the Lighthouse business during the second half of the financial year ended 30 June 2011.

Furthermore, there was a one-off expense relating to the departure of former chief executive and founder Spencer Young, who left the firm at the annual general shareholders meeting earlier this month.

HFA also faced a one-off expense relating to a reduction in staff resulting from a restructure of the local Certitude business.

Finally, the continued expansion of Lighthouse had led to increases in staff remuneration to bring salaries in line with industry standards, the firm said.

It is the first forecast the firm had provided for the first half of the new financial year because the uncertainty in the markets prevented it from making earlier statements, it said.

The firm's asset under management and advice stood at US$6.03 billion as at 31 October 2011.

HFA had net inflows of US$414.5 million between 1 July and 31 October, while over the six months to 30 June the firm had inflows of US$425.7 million.