Six of H2O Asset Management’s funds suffered a reduction of more than €2.6bn in their combined assets last week, as investors pulled their money on concerns about holdings of debt linked to a controversial German financier.

Fresh data published on Tuesday showed that the flow of money out of the funds extended into Friday, the same day that H2O’s chief executive gave a video address to calm investors’ nerves and explain his relationship with Lars Windhorst, a flamboyant entrepreneur with a history of legal troubles.

The six funds — named Adagio, Allegro, Moderato, Multibonds, Multistrategies and Vivace — had assets of €17.2bn before the outflows began last Tuesday, when the Financial Times reported on their exposure to Mr Windhorst.

A spokesman for Mayfair-based H2O, which is a subsidiary of French bank Natixis, declined to comment on Tuesday.

H2O’s Allegro fund had the steepest decline in assets, with a fall of more than 27 per cent. Morningstar, whose assessments are used as a key guide for investors, suspended its rating on this specific fund the day after the FT’s report, citing liquidity concerns.

In a statement on Tuesday afternoon, H2O said that “net outflows have slowed significantly” since Monday, adding that its funds had since received “some material inflows”. However, the asset manager did not give any specific figures.

Despite H2O’s vow last week that it was “committed to continuing to work” with Mr Windhorst, the fund manager has begun dumping its exposure to the German financier as its crisis deepened.

H2O told clients on Monday that it had sold €300m of the bonds last week, leaving it with a €1bn exposure. It then publicly announced that it had less than €500m of exposure left by the end of Monday, although it did not specify what proportion of this was due to the fund slashing the valuation of the debt it is still holding.

The fund manager said in a letter to investors earlier that day that it would revalue any bonds that remained unsold at “a very significant discount” to their previous marks.

Natixis’s asset management chief last week described H2O’s range of holdings as “quite diversified”, however, adding that the portfolio included “even a luxury goods company in Italy”. That was a reference to La Perla, the Italian lingerie maker Mr Windhorst purchased in 2018 after settling a legal dispute with its previous owner, Italian entrepreneur Silvio Scaglia.

Separately, the head of one of the companies H2O backed announced plans to step down on Monday. ADS Securities confirmed its chief Philippe Ghanem was leaving the Middle Eastern brokerage, but that the decision was unrelated to the crisis at H2O. The asset manager last week listed an investment in the bonds of ADS Securities as one of nine positions related to Mr Windhorst.

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