Aviva Investors is scrapping its £78.9m Property Investment fund because it has become too small to run economically.
Philip Nell, who also runs the £1.5bn Aviva Investors Property Trust, manages the fund.
The Property Investment fund has shrunk from just under £200m at the start of 2011 down to £78.9m, due to a combination of poor performance and outflows.
An Aviva Investors spokesperson confirmed it was closing the Property Investment fund in February because “the size of the fund has reduced to a point where it is no longer optimal”.
The spokesperson said Aviva had already begun the process of selling the fund’s assets.
Investors will be given the option of either redeeming their units in the fund for cash or swapping their units for units in the Property Trust free of charge.
The Property Investment fund is the worst performer in the IMA Property sector in the past three years, losing investors 19 per cent.
But its larger counterpart has performed much better, delivering a 9.7 per cent return to investors in the same period.
The Property Trust has also contracted since 2011, when it reached £1.9bn midway through the year.
But it has begun to grow since October 2013 as clients are increasingly drawn to income-generating investments.