Columbia Threadneedle is winding-up its UK Absolute Alpha fund after assets in its former absolute return giant have dwindled to a mere £80m.
In an update published on its website the fund group concluded it was in the “best interest of investors” to close the fund due to a “significant fall” in assets and “expected further redemptions”.
“We have decided to close the Threadneedle UK Absolute Alpha Fund as this fund has been reducing in size and we expect that future demand will be low,” a Columbia Threadneedle spokesperson said. “We continue to focus on offering our strong core UK fund range.”
Following the decision to close UK Absolute Alpha, Mark Westwood, who ran the fund alongside Chris Kinder (pictured), has exited Columbia Threadneedle after 14 years, Portfolio Adviser understands.
Kinder remains at the business and will continue to manage the £1.4bn Threadneedle UK fund.
Threadneedle UK Absolute Alpha assets shrivel to £80m
At its peak, UK Absolute Alpha had over £1bn in assets just before the Brexit vote. But since then, it has shrivelled to £80.2m, according to data from Trustnet, as performance slumped and investor patience for the absolute return sector waned.
Some of the absolute return sector’s biggest funds like Invesco Global Targeted Returns and Standard Life Investments Global Absolute Return Strategies (Gars) have shed billions of pounds of assets this year.
James Clunie’s Jupiter Absolute Return fund has shrunk from £1.2bn at the start of 2020 to £180.4m in November thanks to poor performance and £791.9m worth of outflows. On Friday Jupiter dropped Clunie from the mandate, handing it off to the multi-asset team led by Talib Sheikh.
See also: End of an era for mega absolute return funds as investors pull billions during Covid crisis
Fund was deemed ‘moderate’ value by Columbia Threadneedle fund board
Portfolio Adviser revealed at the start of the year the asset manager had dropped performance fees across £660m worth of long/short UK-domiciled funds, including UK Absolute Alpha, ahead of its debut value for money assessment.
UK Absolute Alpha was deemed “moderate” value on a five-year view by Columbia Threadneedle’s fund board, which scored it two out of a possible four stars for performance and charges for retail shareholders.
See also: Columbia Threadneedle value assessment deems 55 share classes ‘poor value’
On a three-to-five-year view, Kinder’s fund is among the top five worst funds of the IA Targeted Absolute Return sector, losing investors 6.5% and 7.1% while the average fund has gained 3.4% and 7.8%.
The only two funds that have done consistently worse over that time frame are Clunie’s Absolute Return fund and the Merian Global Equity Absolute Return (Gear) fund, which have lost 22.5% and 20.0% over three years and 16.4% and 10.5% over five years respectively.
Gear is yet another shrinking mega absolute return fund which halved in size from £13.4bn to £6.9bn in 2019 off the back of continued losses. In November the fund stood at £1.1bn, according to data from Morningstar, after suffering £1.9bn worth of redemptions.
