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H2O Investors Pull $503 Million From Funds as Freeze Lifted

H2O Investors Pull $503 Million From Funds as Freeze Lifted

Investors pulled 429 million euros ($503 million) from seven H2O Asset Management funds that reopened this week, fleeing the strategies that had contained hard-to-sell assets.

The bulk of the redemptions came from H2O’s Adagio and MultiBonds funds, which shrank by a combined 333 million euros on Thursday, according to data compiled by Bloomberg. All seven funds previously held combined assets of about 8.3 billion euros, according to a statement on H2O’s website Friday confirming the outflows.

The funds were reopened on Tuesday after being frozen in late August on concerns about their holdings of thinly traded bonds linked to German financier Lars Windhorst. The declines account for just under 2% of the almost 22 billion euros of assets managed by H2O at the end of June.

Redemptions on Friday were lower than in previous days, the London-based money manager said in the statement.

“This is testament to the great partnerships H2O has built over the years with our investors,” the company said.

The firm majority owned by French lender Natixis SA came under regulatory pressure to suspend the funds as it sought to sell the hard-to-value assets back to Windhorst. It then separated the securities from the more liquid holdings via a process known as side-pocketing.

The bonds were at the center of a crisis last year, when the Windhorst links triggered about 8 billion euros of withdrawals.

Read More: H2O Prepares to Reopen Troubled Funds and Face Investor Verdict

The fund split means that about 1.6 billion euros of investors’ cash is still locked away, according to data compiled by Bloomberg. While H2O has given investors shares in the less-liquid funds, they’re unable to redeem them while the money manager attempts to sell the underlying securities back to Windhorst.

©2020 Bloomberg L.P.