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Asset managers said bid-offer spreads on bond funds have widened further as a result of ballooning spreads for credit.

Some firms have started evaluating their holdings manually, calling brokers and getting an average price for their portfolio rather than using automated quotation systems.

The aim is to produce a fairer mark-to-market value for portfolios, many of which have been hit by turbulence in the sector.

According to investors, New Star Asset Management was the latest house to be mooting such a move.

Old Mutual Asset Managers had already acknowledged it was using alternatives to its standard pricing mechanism on certain instruments in Stephen Snowden's £1bn Corporate Bond fund.

Simon Wilson, head of marketing at Old Mutual Asset Managers, said the firm had been using iBoxx as a main pricing source, but was using alternatives in cases where Old Mutual did not feel the price on iBoxx was representative.

Mr Wilson said Old Mutual could not respond to press enquiries about how it valued particular instruments.

The fund, which is one of the largest and most respected in the Sterling Corporate Bond sector, was bottom of its peer group over one and three years to 29 September, with losses of 17.6 per cent and 17 per cent, respectively.

The second-lowest fund in the sector over one year, the £375.6m Resolution Corporate Bond fund, lost 14.3 per cent. The second-lowest fund over three years, the Axa Sterling Corporate Bond fund, lost 16.8 per cent.

Mr Wilson said: "The key point to us is that we were buying into credit too early, and we had some issues with our bank debt as well. We've been more bullish than others earlier in the cycle.

"Mr Snowden believes the turbulent markets represent the turning of the credit cycle and a great opportunity for credit investors."

New Star also suffered fourth-quartile performance in its four onshore sterling bond funds for which Morningstar had data over one year to 29 September.

Although the ranking of all four funds - the £685.1m Sterling Bond, £205.4m Extra High-Yield Bond, £806m Fixed Interest and £372.8m High Yield Bond portfolios - was better over three years, none of them was first or second quartile.

Meera Patel, senior investment analyst at Hargreaves Lansdown, said: "We have noticed the bid-offer spreads have widened due to the underlying pricing on the bonds. The bond markets have gone belly-up, and it's very difficult to give prices on a day-to-day basis because some dealers are giving nonsense quotes. Once markets stabilise, they'll go back to automated pricing."

New Star was unavailable for comment.