Aberdeen Standard Investments will shutter its underperforming UK Recovery Equity fund, Portfolio Adviser has learned.
In a letter to shareholders seen by Portfolio Adviser the fund group said it would be liquidating the fund after its largest investor decided to redeem their holding which ASI said “constitutes a substantial proportion of the assets of the fund”.
The fund will officially close on 22 October.
ASI noted that small funds like ASI UK Recovery Equity, which currently sits at £52.6m, face a number of operating difficulties due to the fact they are unable to benefit from economies of scale. This can lead to problems buying and selling assets at a reasonable price, which can in turn compromise performance and lead to higher costs, ASI said.
“Following consideration of the available options, we believe it is in the best interest of all shareholders to close the fund, liquidate all of the underlying assets and return the proceeds to investors.”
The ASI UK Recovery Equity fund’s performance woes are well-documented. The fund beat out the Woodford Equity Income fund as the worst performer over the first half of the year after it fell 42.5%. Over three years it has handed investors a loss of 54.1% compared with the IA UK All Companies sector, down 5.4%.
In May ASI announced lead manager Andrew Hunt (pictured), who managed the fund since 2017, had been replaced by Wes McCoy whose own ASI Unconstrained UK Equity fund was also among the bottom 10 performers of H1 2020.
McCoy will continue to manage the fund in line with its investment objective until five business days before the closure date.