Putnam Investments on Thursday closed its $12bn prime money market fund amid a spike in redemption requests from clients.

The board of Putnam Funds said it had voted to close the Putnam Prime Money Market Fund and distribute all fund assets. The fund is aimed at institutional clients and has a minimum investment of $10m.

The company said the action was not related to the portfolioâ??s credit quality but was instead a reaction to market-wide liquidity issues and pointed out that it had no exposure to the securities of Lehman Brothers, Washington Mutual or AIG at the parent-company level.