BlackRock has revealed its plans to close its highly performing European credit fund to new money.
The BlackRock European Credit Strategies fund, managed by Citywire AAA-rated Michael Phelps, has returned 16.6% over the past three years, top quintile within its Citywire Bond Strategies sector where the average fund has generated 6.3% through the period.
The fund currently contains €1.5 billion (£1.2 billion), and BlackRock intends to hard-close it at €1.7 billion (£1.4 billion).
BlackRock has also set a €175 million (£140 million) capacity limit on its smaller European Constrained Credit Strategies fund, which holds €138 million (£110 million) and which Phelps co-manages with AAA-rated Alex Shingler.
The closure will not affect the way the portfolios are managed.
‘The funds had received strong levels of subscriptions for over a year and during that time we took preliminary steps (including reducing marketing activities) to control the size of the funds and ensure that each did not exceed its capacity,’ BlackRock stated.
‘From the point the net asset value of each fund reaches the applicable limit, BlackRock will initiate a process so that shares in the relevant fund will not be available for subscription to either new or existing shareholders.’
The group explained that it was taking such steps to ensure that the funds’ assets ‘can be suitably invested and that existing investments can be efficiently managed’.
Phelps is currently increasing his portfolio’s exposure to higher-quality credit, cutting back on his holdings in high yield and subordinated financials, and adding top-down hedges.