PEARL, the closed life fund, yesterday removed the assets of two million policyholders from two Henderson Global Investors’ funds, following a three-month legal wrangle with the fund manager over a series of investment blunders.

Hugh Osmond, the entrepreneur who bought Pearl from Henderson’s former parent company in December 2004 for £1 billion, pulled the business after Henderson allowed a relative novice to run its private equity fund.

Roger Greville, a former civil servant with a mainstream investment background, was in charge of the £600 million Pearl mandate but made a series of poor investments, including sinking €20 million (£13.8 million) into an italian fitness club business where the chief executive was facing fraud charges.

Henderson Private Capital, Mr Greville’s division, has lost £100 million since 1999, a period of otherwise high returns for private equity funds.

Under a new set of investment management agreements announced yesterday, Pearl policyholders’ assets will be removed from Henderson’s private equity and property funds, to be invested elsewhere in the fund management sector.

Henderson will be paid a similar level of income by Pearl because, despite losing fees on the two funds, it will be able to make them up on other investments for Pearl.

Mr Osmond said that Henderson had been “extremely constructive” in addressing the concerns he had with the investment strategy of the funds. “We now intend to supplement the best performing Henderson investment strategies with a selection of the best managers available elsewhere in the markets,” he said.

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