Exclusive: Billionaire Lasry's junk fund stops voluntary reporting of asset levels

Mon Jan 11, 2016 11:35pm EST
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By Tim McLaughlin and Svea Herbst-Bayliss

BOSTON (Reuters) - A junk bond fund run by billionaire Marc Lasry's Avenue Capital Management, which has experienced heavy investment losses and investor withdrawals, has stopped voluntarily reporting daily asset figures to the mutual fund industry's top two tracking firms.

Research chiefs for Morningstar and Lipper said on Monday they had not received daily asset under management figures from the Avenue Credit Strategies Fund ACSBX.O since about mid-December. The fund is not required to report the figures, but not doing so is "very unusual," said Jeff Tjornehoj, head of Americas research for Lipper, a Thomson Reuters unit.

Avenue Capital's decision to stop reporting asset levels to the widely followed research firms happened on the heels of the biggest blow up in the mutual fund industry since the 2008 financial crisis.

People familiar with the situation said outflows from the Avenue Capital fund had become a distraction after an unrelated junk bond fund run by Third Avenue Capital Management imploded in early December. Junk bond investors already were on edge, pulling $3.6 billion from high-yield funds in November, according to Morningstar data.

Avenue Capital's fund was particularly hard hit after Third Avenue said on Dec. 9th it was liquidating its Focused Credit Fund. Investors reacted by yanking $262 million from the Avenue Capital fund during the first two weeks of December, according to Lipper data.

"Our fund investors receive all key information on the fund, either directly or through our website," a spokesman for Avenue Capital Management said. The fund also continues to report its daily net asset value to the independent research firms.

But the research firms cannot calculate a fund's flows - investor deposits and withdrawals - unless they have asset levels.

"We calculate flows in-house so if we don't have assets, we won't have flows," said Annette Larson, senior research analyst at Morningstar.   Continued...

CEO and Co-Founder of Avenue Capital Group Marc Lasry speaks at the Reuters Global Investment Summit in New York, November 17, 2015. REUTERS/Brendan McDermid