Scottish asset manager Aegon is to close its retail European Bond and UK Cautious Managed Funds with effect from the 31 July, as they are now at a level that makes them uneconomical to run. Sales and marketing director Jon Bennett says this is because the costs of running the funds, such as dealing charges and fees to auditors, could potentially begin to erode investor capital.

It is also believed that neither fund will attract sufficient demand in the longer term for them to regain the necessary scale for the funds to become economically viable.

The European Bond Fund size is currently £3.6 million ($5.6 million) and the UK Cautious Managed Fund stands at £7.8 million.

Investors in the funds will be offered a range of options including a free switch into an alternative Aegon Asset Management fund, alternatively ISA investors may choose to transfer their investment to another provider.

“Running costs coupled with the fact that in these difficult economic times we do not believe there is the necessary longer term appetite for the funds, means closure is the only really viable option,” Mr Bennett added.

The firm is to bear all of the wind-up costs. Aegon’s assets under management totalled more than £35.1 billion at the end of April. The company's activities are divided into three business areas: institutional business, insured business and retail-fund business.