RAB Capital threatened to close their flagship Special Situations fund if investors were not willing to lock up their investment in the fund for another three years.

Under the proposal investors will not be able to redeem until October 2011, but fees will be cut from 2 per cent a year and 20 per cent of profits to 1 and 15. A closure of the fund would likely lead to big losses as it is heavily invested in Aim-listed mining stocks and has about a third of its money in unlisted companies.

The fund has almost lost half its value so far this year.