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Threadneedle suspends hedge fund redemptions
Threadneedle has suspended redemptions, dealing and valuations on its Emerging Debt Crescendo hedge fund due to "an acceleration in investor redemption requests".
The fund is run by Richard House, who also manages Threadneedle's £133.2m Emerging Market Bond retail fund.
Threadneedle said meeting all its recent redemption requests would up the hedge fund's weighting in illiquid assets, although Mr House had been raising cash in anticipation of redemptions.
Threadneedle said it did not wish to be forced into selling its illiquid positions too quickly and had therefore suspended redemptions in the interests of investors.
It expected to lift the redemption ban in January once it had closed out the fund's illiquid positions.
Despite these recent stumbling blocks, Threadneedle stressed the differences between the management techniques on Mr House's hedge fund and his long-only Emerging Market Bond fund.
The retail portfolio outperformed the IMA Global Bond sector over one year, with returns of 10.6 per cent against 9.3 per cent for the sector.
Against its direct competitors, it outperformed the £52.3m Investec Emerging Markets Debt fund by 590 basis points, but underperformed the £5.4m M&G Emerging Markets Bond fund by the same margin.
S&P Fund Services said earlier this week managers were seeing a once-in-a-decade opportunity to invest in emerging market debt vehicles, with high reserve levels and strong growth prospects in emerging markets.
According to Alison Cratchley, lead analyst, managers had an opportunity to buy from distressed sellers at low valuations.
However, S&P added there had been massive outflows from emerging market debt funds in the past month in tandem with losses in the asset class. In some cases, it said, funds had halved in size since it conducted its last review in April 2008.
Managers had fewer opportunities to pick up bargains because of cash leaving their funds, the agency reported.
A minority of portfolios have still grown during this period, however. The HSBC GIF Global Emerging Markets Local Debt fund had retained $83m (£56.6m) under management at the end of October, compared with $45m in April despite double-digit losses.