Pengana Capital has terminated its Asian Equities fund, as a result of sustained higher volatility in the Chinese stock markets.
The fund was closed to applications and withdrawals on Friday and management fees have been suspended.
Pengana will liquidate the fund and return the cash proceeds to investors.
The decision was predominantly made because global macro issues overshadowed fundamental drivers, Pengana head of distribution Damian Crowley told InvestorDaily.
"We believe that over the last two years the volatility in those equity markets has been very high," Crowley said.
"A lot of that has been driven by global macro issues and global fund flows and not by fundamental stock analysis.
"Given that most of our stock analysis is based on fundamental stock analysis we are seeing huge swings in stocks that we like."
Crowley said the fund experienced relatively higher volatility than the broader market because it was more heavily invested in China and Hong Kong and more invested in upcoming industries such as health care and IT.
"We still think that thesis is correct, but we don't know when markets will return to more fundamental drivers, and instead of waiting for that to occur ... we think it is in their best interest to terminate the fund," he said.
The fund's team of six analysts, led by portfolio manager Diana Lin, are still deciding whether they would continue in their current form and look at the option of teaming up with another company to support them.
Pengana is not the only manager to return capital to investors because of shifty markets.
Last month, the iconic American hedge fund manager Louis Moore Bacon, founder of Moore Capital Management, decided to return $2 billion to his investors.
He said that political decisions have currently a greater impact on markets than economic factors, which made it nearly impossible to forecast prices.
