LaFayette Investment Management has stopped investors from fully redeeming their holdings in some of its funds of hedge funds, after some of the funds that it had invested in seek to impose their own limitations on investors getting out.

The manager, which has about $3.3bn in a range of fund of hedge funds, yesterday said that some funds it had invested in had become "less liquid", by either imposing restrictions on how quickly investors can redeem, or not paying out redeemers fully in cash.