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Newton to shut European Higher Income fund

Newton is to close its underperforming £33.9m European Higher Income fund due to its small size, Investment Adviser has learned.

The fund, run by Rajesh Shant, is bottom quartile in both three and five years in the IMA Europe ex UK sector according to FE Analytics.

It has gained 60 per cent in the five years to October 10 while its FTSE Europe ex UK index benchmark gained 84.2 per cent in the same period.

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Mr Shant took on management of the fund in March 2012, since when the fund has produced a third-quartile return of 14.2 per cent.

Mr Shant also runs the £179.9m Newton Continental European fund, which has outperformed the European Higher Income fund, and will continue to run the portfolio.

Chelsea Financial Services managing director Darius McDermott said: “A lot of groups are rationalising their fund range post-RDR and this fund is a small one.

“Running small funds is not a good idea so it makes sense to close them.”

A spokesperson for Newton said the fund will close on December 13.

“In December 2012 Newton announced its intention to rationalise various fund vehicles that were either duplicative, subscale or non-viable in the longer term,” the spokesperson said.

“Newton [believes] that to remain focused on the best possible performance for its existing clients, there is a need to rationalise the smaller funds in the range and those which have not attracted meaningful assets over the years.”