* H1 net profit estimate A$6 mln vs A$207.9 mln previous year
* FY pre-tax profit forecast downgraded from 8-12 pct target
* Company blames equity market volatility
* Shares down 15 pct (Recasts on share reaction; adds investor comment, context)
By Byron Kaye
SYDNEY, Jan 23 (Reuters) - Australian fund manager Challenger Ltd CGF.AX warned on Wednesday that global stock market volatility had helped wipe out most of its half-year profit and slashed its guidance for the full year, sending its shares down the most in a decade.
The second profit warning from a major listed Australian fund manager this month highlights the vulnerability of the sector to share price fluctuations as a protracted trade dispute between the United States and China casts uncertainty over markets.
With A$81 billion ($57.75 billion) in assets under management, Challenger's business model involves investing people's retirement savings and paying them guaranteed amounts, known as "annuities", from its investment returns.
It also runs investment funds, for which it collects performance fees if it clears certain hurdles.
But the Sydney-listed company said earnings for the six months ended December were "impacted by increased market volatility", and profit contributions were down from both units. It estimated a net profit of A$6 million for the period, from A$207.9 million the prior year.
The company added that it now expects pre-tax profit for the year to end-June to between A$545 million and A$565 million, compared with A$547.3 million in 2018. At its annual meeting in November, the company said it was targeting pre-tax profit growth of 8 percent to 12 percent.
Shares of Challenger were down 15 percent by mid-session, their biggest intraday decline since 2009, as investors mulled the impact of a downward-trending share market on its returns and on its ability to attract and keep customers.
"It does affect fund levels and it does affect flows," said Jason Teh, chief investment officer at Vertium Asset Management, referring to stock market turbulence.
"It's actually a double-whammy for these funds management businesses."
Equities globally have been battered by a host of macro-economic factors, from rising U.S. interest rates to new U.S. tariffs to an unexpectedly fast slowdown in Chinese consumer spending.
Australia's benchmark S&P/ASX 200 index .AXJO is down 8 percent and Wall Street's Dow Jones Industrial Average .DJI is down 9 percent since August.
On Jan. 9, Challenger rival Platinum Asset Management PTM.AX warned it would post an unrealised loss on its investments for the same half-year period, including almost no performance fees since its funds under management shrunk. said its performance fees would come in at just A$2 million, from A$6 million in the previous first half. ($1 = 1.4025 Australian dollars)