Henderson Global Investors will close its Indian Equity fund next month owning to its low assets under management and uncertainty over tax rules.
The asset manager sent a letter to unitholders on June 29 informing of the closure and liquidation of the Luxembourg-domiciled sicav. This is scheduled to take place on August 3.
“The net assets of the fund have fallen to £10.8m as at 31 March 2012. Furthermore, following the Indian tax authorities’ proposed changes to Indian tax law, the fund is facing legal uncertainty,” according to Henderson.
“It has become expensive to run such a low assets fund with an uncertain future. Therefore, it is, with regret, considered to be in the best interest of the shareholders to close the fund.”
Henderson suspended all subscriptions into the fund on the day the letter was dispatched.
The fund, which is managed by Tata Asset Management (Mauritius), was up by 26 per cent from launch in July 2008 to May 31, 2012. This compares with a 18.8 per cent increase in the India BSE index.
Meera Patel, senior analyst at Hargreaves Lansdown, claims the closure is in the best interests of investors.
“Small funds often have higher fees, as the charges are spread across a smaller number of investors,” she says. “In this case the fund’s total expense ratio (the annual charge plus additional costs) is 2.75 per cent, which, in our view, is expensive.”