Increased redemptions from the New Star International Property fund, mainly, the firm says, from a "few institutional clients", has forced the suspension of dealing in the fund until further notice.

The hope is to restore sufficient liquidity to the fund for it to meet redemptions when it re-opens for dealing, but New Star would not say or even guess how long the suspension might last, promising only to “communicate with our investors and their advisors throughout the process.”

New Star asserts that the fund has done comparatively well since it launched on 4 June 2007, having fallen just 9.2 per cent, compared to a 39.9 per cent decline for the FTSE All-Share total return index and a 34.4 per cent decline for the MSCI World total return index, in sterling terms.

At yesterday's valuation point, the fund's gross income yield is 4.2 per cent. The fund's net income will continue to be paid during the suspension period.

John Duffield, founder and chairman of New Star, told the Financial Times: “This is a crisis of confidence. There is nothing to be lacking in confidence about, and we’re determined to get through it.”