The BlackRock UK absolute alpha fund has seen its assets almost halve to £1bn over the year to the end of April.
The fund, managed by Nick Osborne and Mark Lyttleton, had £1.8bn in assets at the end of April 2011, according to FE.
The fund was down by 2.7 per cent for the year to May 25, against the absolute return sector average of -2.1 per cent. The fund is up by 0.7 per cent over three years to May 25 against a sector average of 9.4 per cent.
At the Cofunds absolute return round table in London last week, Osborne said the team was too optimistic last year and was attracted by cheap equity valuations. He said the fund is now less than 10 per cent exposed to the market, down from more than 20 per cent at the start of 2011, and the portfolio has 96 stocks, down from 120 in the middle of last year.
A BlackRock spokesman says: “The fund has delivered excellent returns for investors over the medium and long term. From January to May, the fund has shown a 2.7 per cent return.”
Bestinvest senior investment adviser Adrian Lowcock says: “The drop in assets reflects disappointing performance.”