Natixis's H2O Says Redemptions Have Slowed After Asset Slump
H2O Says Redemptions Have Slowed as Asset Bleeding Stemmed
(Bloomberg) -- H2O Asset Management says redemptions from its funds have “markedly subsided” after assets plunged by more than $6 billion in a four-day stampede that raised questions over the liquidity of some mutual funds.
The company said clients pulled 450 million euros ($512 million) from its funds on Wednesday, bringing assets under management to 27 billion euros. That’s down from the $37.6 billion in assets the firm had in April.
“Fund flows are returning to normal,” H2O Chief Executive Officer Bruno Crastes said in a statement. “We would like to thank our investors for their continued commitment to H2O and to reiterate that 98% of assets held by our funds are perfectly liquid.”
Funds that allow investors to withdraw at will but hold hard-to-sell securities have come under increasing scrutiny from lawmakers and regulators. Bank of England Governor Mark Carney reprimanded such funds in parliamentary testimony on Wednesday.
"These funds are built on a lie, which is that you can have daily liquidity, and that for assets that fundamentally aren’t liquid,” Carney said. “That leads to an expectation of individuals that it’s not that different than having money in a bank. You get a series of problems, you get a structural problem but then you get a consumer issue.”
Rating Cut
The upheaval at the money manager ensued after Morningstar Inc. suspended its bronze rating on the Allegro fund, citing concerns about the “liquidity and appropriateness” of some of its holdings.
The Allegro Fund’s assets under management plunged by nearly 48% from June 18, the day before the Morningstar note, through June 25. The fund now has total of 1.2 billion euros of assets, according to data compiled by Bloomberg.
H2O implemented measures aimed at encouraging inflows while making it more painful for investors seeking to get out. The company said that new money had entered its funds since Monday, after the firm dropped entry fees. Stabilizing the business is a priority for the firm, seeking to avoid the fates of funds managed by U.K. stock-picker Neil Woodford and GAM Holding AG.
Swiss private bank Union Bancaire Privee is examining its investments in H2O Asset Management, according to a spokeswoman for the firm. Geneva-based UBP manages about $130 billion globally. Meanwhile, Investec Plc, which until the end of May was invested in H2O’s Multibonds strategy through one of its funds, has cut its holdings, a spokeswoman said, without providing details.
--With assistance from Suzy Waite, Nishant Kumar and Patrick Winters.
To contact the reporter on this story: Lucca de Paoli in London at gdepaoli1@bloomberg.net
To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Patrick Henry
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