Natixis’s H2O Revives Entry Fees After Halting Investor Exodus

(Bloomberg) -- Natixis SA-backed H2O Asset Management will reinstate a 5% entry fee on some funds, marking a step toward recovery after investors pulled billions out of the firm on concerns over its holdings of hard-to-sell assets.

The fee will be reintroduced on Sept. 2 for retail investors in six funds, including Allegro, the company said in a statement on its website. The asset manager shelved the charges last month in an attempt to attract cash after investors yanked about 8 billion euros ($9 billion) in 15 days. Morningstar Inc.’s decision to suspend its rating of Allegro set off the client exodus.

H2O’s struggles have added to growing concern about funds holding thinly traded assets while allowing clients to pull their money out on a daily basis. And it’s not alone. Neil Woodford loaded his flagship fund with micro-, small- and mid-cap stocks. Last month, facing growing withdrawals, he stunned the financial world by freezing the fund to buy time to raise cash.

Morningstar suspended its rating of H2O’s Allegro fund on concerns about its holdings of “high-risk corporate bonds” linked to German entrepreneur Lars Windhorst.

The entry levies were introduced earlier this year in order to slow inflows into H2O funds after years of stellar returns.

©2019 Bloomberg L.P.

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