SINGAPORE, June 7 (Reuters) - Sydney-based Taurus Funds Management Pty Ltd has shut its precious metals mutual fund as Australian and U.S. investors fled after prices of gold began to decline in the beginning of the year, director Gordon Galt told Reuters.
The fund, which at one point held about $250 million in assets under management (AUM), was closed last month after large redemptions reduced the size of the fund. Its AUM was at $120 million as of December, according to Galt.
"We had a number of large investors who decided they no longer wanted to carry the exposure to precious metals," said Galt. "So once the fund got below a certain size, it was not worth continuing to run it."
Gold fell to a two-year low of $1,321.35 in mid-April, its worst two-day drop in 30 years, on fears European countries would liquidate gold reserves.
The metal is down 16 percent this year, after 12 annual gains, as investors switched to higher-yielding stocks. Growing evidence of a recovery in the global economy has hurt bullion's safe-haven appeal.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, has seen an unprecedented decline in holdings, which are at a four-year low.
"The investors were changing their mandates and allocations in the first quarter of the year. It was not precipitated by the (April) fall," Galt said.
Galt declined to reveal who the investors were but said they were Australian and U.S. investors. Five employees who were managing the fund have departed the firm, he said.
The Taurus Enhanced Gold and Precious Metals fund has lost about 10 percent of its value this year and nearly 20 percent since its inception in 2011, Thomson Reuters Lipper data showed.
Galt said his firm continued to invest in gold through its private equity funds.
"Our private equity funds still have precious metals exposure in their portfolios. We are not doing anything with those," Galt said. (Editing by Muralikumar Anantharaman)