Investors Bail Out of Ivy High Income Fund in December

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 [e-mail]

(END) Dow Jones Newswires

January 12, 2016 12:05 ET (17:05 GMT)

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