Henderson Group, a UK-based fund manager, has agreed to terminate a £27 million fund agreement with Bellpenny.
Under the agreement, Bellpenny was responsible for the distribution of £27 million fund called Avellemy fund set up by Henderson.
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Henderson has decided to terminate the fund on 19 September as it did not attract sufficient inflows and it was not able to maximize returns for investors, according to Money Marketing.
However, any remaining funds will be returned to clients.
Launched in 2012, Avellemy fund currently has £27.3 million in assets under management.
Kevin Ronaldson, chief executive of Bellpenny, said: "Bellpenny has grown significantly since this arrangement was set up and we believe it is in our clients’ best interests to move to a discretionary fund manager arrangement. This will allow us to pass on cost savings to clients as the annual charges will be lower."
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By GlobalDataRonaldson added that Bellpenny is seeking for discretionary investment permissions and has selected an investment manager to manage the funds.
Additionally, Bellpenny has already written to advisers regarding the closure of the fund and will write to clients next week.
Ronaldson said: "We will advise clients to switch their investments to the new fund range, providing it is still suitable for them. We expect that almost all, if not all, clients will do so. However, any client which has not taken action by 19 September will have their money returned to them."
Henderson said: "For any fund to be most effective over the long term, it needs to be of significant size in terms of AUM. Based on the current AUM of the funds and the fact we believe it is unlikely the funds will attract significant levels of new inflows we believe the Avellemy Oeic will be unable to grow at a rate that would either continue to make it feasible from a commercial viewpoint.
"The FCA has agreed we can terminate the funds for the reasons stated above," the firm said.
