UPDATE 1-H2O Asset to reinstate entry fees for some funds

* To restart entry fees of up to 5% on some funds * Follows brief suspension after spate of outflows * Had been hit by Morningstar liquidity, governance concerns (Adds detail from statement, background) By Noor Zainab Hussain and Simon Jessop LONDON, July 19 () – H2O Asset Management, part of French bank Natixis, plans to start charging clients again to join some of its funds, it said on Friday, after suspending fees in an effort to attract business after an outflow of client cash. The London-based firm was hit hard after ratings agency Morningstar placed one of its funds under review citing questions over liquidity and governance, sending shares in Natixis lower and spurring investors to pull their money. Morningstar had been particularly concerned about H2O’s stakes in “highly illiquid bonds” issued by several companies related to German entrepreneur Lars Windhorst. In response, H2O suspended entry fees on its funds and sought to shore up investor confidence by ditching some of its holdings in illiquid debt, while Natixis said it would bring forward an audit of the company. H2O said last month it had subsequently seen big inflows while redemptions had subsided markedly. Shares in Natixis also rose. On Friday, H2O said in a statement it would begin reinstating an entry fee of up to 5% on some of its funds in August and September. From Aug. 1, H2O’s Multi Aggregate fund would apply the fee to its A share-class. From Sept. 2, the fee would be applied to the retail-focused ‘R’ share class in its Largo, Adagio, Allegretto, Moderato, Allegro & MultiBonds funds. Details on fees for its institutional investors would be confirmed shortly, it said. (Editing by Jan Harvey and Mark Potter)Our Standards:The Thomson Trust Principles.