abrdn is closing its ASI Eastern European Equity fund, which had been suspended since 1 March 2022 as it had 43% of its assets in Russia, International Investment's sister brand Investment Week has learned.
The fund will close on 13 September and according to a client letter the closure will allow investors to receive the proceeds "from a significant proportion of the fund's portfolio". Investors will also retain "proportionate rights to the illiquid assets of the fund and will benefit from any future sale should they become tradeable again".
According to the latest available factsheet, dated 31 January, the fund sat at £18.4m, with a spokesperson from abrdn saying it had been experiencing outflows in the years prior to the suspension.
The client letter said that after taking into account the illiquid assess, which have been reduced to zero market value, the funds AUM was about £6m in March 2022.
"Small funds face a number of operating difficulties as they are unable to benefit from economies of scale, which can create problems when buying and selling assets at a reasonable price," said a spokesperson from abrdn. "This can lead to compromised investment performance and proportionally higher costs, to the detriment of shareholder value."
The closure of the fund will require the sale of the fund's underlying assets, the cost of which will be borne by the fund. abrdn estimates that these costs will equate to approximately 0.14% of the fund's value.
Earlier this month (9 August), abrdn confirmed that it was merging or closing 100 funds in a move to save on costs.
At the time, a spokesperson said: "We have now reviewed around 550 funds and concluded that 20% with an AUM of approximately £7bn were subscale, inefficient or not aligned with our core strengths."
