H2O Asset Management says it has seen €8bn of investor outflows from some of its funds, blaming “deeply unfair” media interest in its portfolio of illiquid bonds for sparking a “rampage”.
In a statement on Tuesday, H2O said it had lost more than 30 per cent of assets in its Ucits funds. The outflows follow a Financial Times investigation last month that revealed the London-based asset manager had put more than €1bn of investor money into bonds linked to Lars Windhorst, a controversial German financier with a history of legal troubles.
The firm suggested that it had staunched the bleeding, noting that since June 18, the date of the FT’s original story, it had received €869m of gross inflows. The company did not immediately specify whether the €8bn outflows took account of these inflows.
Shares in H2O’s parent company Natixis fell 1.1 per cent on Tuesday. H2O ran €32.5bn in assets as at the end of last year.
The fund firm, headed by bond trader Bruno Crastes, said the bonds at the centre of media attention in recent weeks accounted for a “small portion” of its overall assets, at 3.7 per cent, at the time of the FT’s original article.
Asking “Why such rampage?” H2O said that “to dispute the liquidity of a fund” created a major risk of a snowball effect, “especially in today’s over-mediated world”.
It went on to liken the episode to a bank run. “Questioning the liquidity of our funds is equivalent to ascertaining the incapability of a bank to refund its deposits, with the devastating consequences which economic history has already taught us,” it said.
Since the crisis erupted last month Mr Crastes has described Mr Windhorst, who has presided over a number of corporate collapses and been declared personally bankrupt in the past, as “extremely talented”. Mr Crastes has also vowed never to halt investor redemptions.
H2O has been considering creating a separate vehicle to house its illiquid assets, the FT reported last month.
The asset manager said on Tuesday it had been forced to lower the value of some securities following “market commotion” but that performance remained close to its peak. It added that it would “carefully study” the results of audits currently being carried out.
“Our commitment to the daily liquidity of our funds was known and has just been put to the test,” it said. “Our portfolios are built in order to face all liquidity scenarios.”
