“It has not attracted the levels of assets required to sustain its long-term future, and, in our opinion, is unlikely to attract significant levels of new inflows,” the company said in a statement.
The FCA has already approved the move and shareholders have been asked whether they want to redeem their shares or switch to another fund by June 21.
This means the only other Legal & General offering for retail investors in that space is the similarly sized UK Absolute fund, managed by Robert Churchlow. The company said it had no plans to close the vehicle as it is seeing increased demand for UK equities.
Alison McKnight, head of proposition management at Legal & General, said that client demand for the fund is “not what we expected” and there is now less demand for absolute return in general, as flows to the IMA Absolute Return sector have “tapered off in the past few years”.
Absolute return funds have come under fire recently, with 9 out of 54 funds in the sector losing money in the past three years.