Tuesday 25 June 2019 2:05 pm

H2O assets fall by €2.6bn over liquidity concerns

Asset management firm H2O saw assets drop by more than €2.6bn across six funds last week as the company deals with concerns over investments connected to a controversial financier.

The London based asset management arm of French investment bank Natixis has been facing questions over its links with bonds issued by Lars Windhorst and the level of illiquidity in its portfolio.

Read more: H2O sells private bonds and cancels fund entry fees

Assets in the six funds that have exposure to Windhorst’s debt fell €1.2bn on Friday, the Financial Times reported.

The Adagio, Allegro, Moderati, Multibonds, Multistrategies and Vivace funds have seen assets fall 2.6bn since H2O’s ties to Windhorst were revealed. 

Yesterday the firm confirmed it had begun selling off some of its private bond portfolio and had cancelled entry fees to attract new investors to its funds.

Non-rated private bonds were cut to below two per cent of assets under management, H2O said, as the firm struggled with an increase in outflows. 

Last week Morningstar put one of H2O’s funds under review. The ratings agency cited concerns over investments in illiquid bonds issued by firms related to Lars Windhorst, who owns investment holding company Tennor.

WIndhorst has been embroiled in several lawsuits surrounding the sale and repurchasing agreements of illiquid bonds, according to the FT. 

Read more: H2O shrugs off conflict of interest concerns

H2O chief executive Bruno Crastes stepped down as a board member of Tennor following reports of a potential conflict of interest. He was replaced by H2O’s chief investment officer Vincent Chailley.

The issue of illiquidity open-ended funds has gained traction in recent weeks following the suspension of Neil Woodford’s equity income fund.