New York (HedgeCo.net) – Most mutual fund investors assume that they can get their money back at any time upon request, but investors in one high-yield mutual fund are finding out otherwise.

According to an article in the Wall Street Journal, the Third Avenue Focused Credit Fund is blocking investors from withdrawing from the mutual fund and the move is the beginning of a liquidation of the fund.

High-yield debt instruments have been under pressure in the second half of 2015 and this contributed high withdrawals by investors in the Focused Credit Fund. According to the article, investors withdrew $1.1 billion from the beginning of the year through December 8.

While most investors worry about liquidity when the make investments in hedge funds, that same caution isn’t taken with ETFs and mutual funds. In this case, shareholders will likely be looking at significant loss of principal as the high-yield market is seeing selling pressure and especially for the types of debt instruments the Focused Credit Fund invested in. Through the close on Wednesday, the fund was down over 30%.

Rick Pendergraft
Research Analyst
HedgeCoVest