Financial planners may be forced to take losses as Lehman Brothers begins liquidating its local flagship product, the EQT Lehman Brothers High Income Fund.
The potential losses may arise after the New York-based investment bank closed its Australian asset management division earlier this week, effectively leaving no-one to manage the fund.
Lehman Brothers' local operations were based in Melbourne and known as Lehman Brothers Asset Management (LBAM).
LBAM chief executive Paul O'Halloran and company portfolio manager Damon Shinnick were made redundant by the group's United States parent.
EQT [listed-firm Equity Trustees] distributed the strategy, which had $150 million under management, through its platform and most of the inflows came from advisers.
"Our main interest is managing things in a fair and equitable way for the unitholders," EQT managing director Peter Williams told InvestorDaily.
Financial planners who made an investment at the start of the six months to April 30 might get around 7 per cent less back, Morningstar data showed.
An investment made one year ago might be worth 5 per cent less, but an investment made five years ago might be worth around 37 per cent more, it showed.
Lehman Brothers, the parent of LBAM, ordered the closure as part of its plan to cut more than 5000 jobs - 15 of them in Australia - in response to the "challenging market environment".
"It is a shame because we thought O'Halloran and Shinnick had a pretty good process and were good investors," Morningstar head of adviser and research Anthony Serhan said.
"It is a loss for the industry and it will be a disappointment for many planners."
Morningstar will change the rating of the fund to avoid from recommended, while Standard and Poor's withdrew its former three-star rating.
Lehman Brothers is facing a lawsuit from Wingecarribee Shire Council for allegedly putting money into failed sub-prime products.
