UBS has downgraded small-cap fund manager HFA Holdings to “neutral" from “buy" after the company yesterday announced it expects first-half 2012 earnings before interest, taxation, depreciation and amortisation to be between $US3 million and $US4 million, well below the $US10 million achieved in the same period in 2010.

The earnings will be impacted by costs of a staff restructure within Australia, increased staff costs at its Lighthouse business in the US, and a lack of performance fees thanks to the reluctance from retail investors to get involved in the market.