Fidelity is to merge away a reduced duration version of Ian Spreadbury's £3.9bn MoneyBuilder Income fund, citing faltering demand for the product despite a recent surge in short-dated bond portfolio launches.
The £71m MoneyBuilder Income Reduced Duration portfolio, run by Mr Spreadbury and deputy manager Sajiv Vaid, is to be merged into MoneyBuilder Income later this month.
In a note to investors the asset manager said the merger, which is subject to investor approval, was due to a lack of client interest.
"Investor demand has reduced for the fund and it is no longer economically viable to continue to manage it," said head of client services Debbie Wates.
The decision contrasts with many asset managers' belief that shorter duration products, designed to mitigate the impact of rising bond yields for investors, are set to become more popular.
The recent flurry of short-duration fixed income fund launches also saw Fidelity move into the space more forcefully. The asset manager launched a short-dated corporate bond fund in November 2016, run by Mr Spreadbury and Mr Vaid, citing in part the "possibility of higher inflation and interest rate rises over the medium to long term".
A spokesman for the firm said the closure of the reduced duration offering related to changing demand from individual clients.
"The strategy was launched to meet specific demand from clients who wanted exposure to Fidelity MoneyBuilder Income but with a lower level of interest rate risk," he said.
"Many of these clients are now at a point where they are comfortable switching back into the master fund as they have become less concerned about interest rate risk."
