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Threadneedle calls time on ailing fund

Threadneedle is closing its UK money market fund following significant redemptions.

Zurich has confirmed that it is to close six of its life and pension funds that invest fully into the Threadneedle fund. The decision to close the fund, which invests in a wide range of cash and money market securities, was prompted by a substantial reduction in its size and the illiquidity of floating rate notes held.

The fund returned -22.3 per cent over one year against a sector average rise of 0.2 per cent, according to Morningstar.

A Threadneedle spokeswoman says: “We believe that it is in the best interests of shareholders to close the fund and shareholders have approved this decision.

“Threadneedle will not compensate investors for capital losses sustained during investment in the fund, although we will pay for most costs associated with the closure.”

Zurich’s UK money securities 2001 AL, G4 AL, EP and ZP funds, as well as the Sterling UK money securities and UK money securities 2 funds, are due to close at the end of next month. The funds are worth £80m in total.

A spokeswoman adds that investors will be offered a free switch or placed into an appropriate default fund.

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