Investors Bail Out of Ivy High Income Fund in December
January 12 2016 - 12:20PM
Dow Jones News
Investors pulled $624 million out of the Ivy High Income Fund in
December, equivalent to some 10% of the troubled fund's assets at
the start of the period, according to data from Morningstar.
The exodus is the latest setback for the fund and reflects
mounting fears among individual investors of the risk of sharp
losses in mutual funds that specialize in hard-to-trade securities
including junk bonds.
Assets in the Ivy fund, managed by mutual-fund firm Waddell
& Reed Financial Inc., have been cut in half since August as
investors have pulled money out. Assets were about $5.3 billion at
the end of December. Investors began redeeming shares in large
quantities in 2014 when two portfolio managers departed in rapid
succession and falling oil prices triggered losses in the junk bond
market.
Redemptions in December more than doubled from $290 million in
November after a junk bond fund operated by Third Avenue Management
LLC began liquidating and halted investor redemptions. The move
sparked concerns about the health of other high-yield bond funds
with large concentrations in especially risky securities with
credit ratings of triple-C or lower. About half of the Ivy fund's
assets fell into that riskier bucket as of Sept. 30, according to
Morningstar.
Ivy didn't immediately respond to a request for comment. Waddell
& Reed shares, down 46% over the past year, were up 3 cents
Tuesday at $24.22.
Write to Matt Wirz at matthieu.wirz@wsj.com
(END) Dow Jones Newswires
January 12, 2016 12:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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