Years before its distressed bond fund blew up, Third Avenue Management lost its mojo.

The firm founded in 1986 by Martin Whitman has been shedding assets since before the 2008 financial crisis, hurt by poor performance and an exodus of managers. Two of Third Avenue’s four remaining funds trail 98 percent of peers over the last five years. The firm’s assets, which reached $26 billion in 2006, sunk to $8 billion at the end of November.

The money manager has also been bleeding talent since Whitman turned over his flagship Third Avenue Value Fund in 2012 to Ian Lapey after it lost 21 percent the prior year. Lapey left along with more than a dozen managers and analysts in the last three years, adding to concerns about the firm’s risk management and oversight. Chief Executive Officer David Barse departed this week after shutting down the Focused Credit Fund.

“It is not a given they will regain their stature," said Lawrence Glazer, managing partner at Mayflower Advisors, where he helps oversee $2 billion. "They are going to need a better story to tell before people will trust them with their money again.”

Daniel Gagnier, a spokesman for Third Avenue at Sard Verbinnen & Co., declined to comment on the company’s performance.

Third Avenue’s defunct $788.5 million Focused Credit Fund held positions in a range of struggling companies. The New York- based firm took the rare step of freezing withdrawals, which triggered a selloff in high-yield bonds and stock markets as fears grew that a collapse in the speculative-grade market could cause a global contagion.

Funds Down

Whitman, 91, began investing in distressed companies in the 1970s. His Third Avenue Value Fund, created in 1990, gained an average of 12 percent a year over its first 20 years, compared with an annual increase of about 9 percent for the Standard & Poor’s 500 Index. Assets topped $11 billion in 2007, according to data compiled by Bloomberg.

Since 2007, the fund has had a few rough years. After Whitman and then Lapey managed Third Avenue Value, Robert “Chip” Rewey III took over on June 10, 2014.

With Rewey at the helm, it has lost 11 percent compared with a gain of 7 percent for the S&P 500 index. The value fund is down 9.8 percent this year and assets have plunged to $1.7 billion by Nov. 30.

The other funds aren’t doing much better. The $179 million Third Avenue International Value Fundis down 16 percent this year and has trailed 98 percent of peers over five years, according to data compiled by Bloomberg. The $395 million Small- Cap Value Fund lost 7 percent this year and is trailing 61 percent of peers over five years.

Third Avenue’s biggest fund, the $3.4 billion Real Estate Value Fund, is up 8.7 percent annually in the last five years, though it’s down 5.4 percent for 2015.

Leadership Concern

“The old school style of value investing Third Avenue is known for has been out of favor,” said Steven Roge, a portfolio manager at R.W. Roge & Co., which oversees more than $200 million for clients. “It hasn’t worked very well for most of the past decade.”

In 2014, managers on the Third Avenue International Value Fund and the Third Avenue Small-Cap Value Fund left the firm, said Leo Acheson, an analyst at Morningstar Inc. Third Avenue has lost 15 members of its investment team since early 2013, he said in an interview.

Third Avenue’s “poor risk management and oversight, leadership changes and continued turnover,” explain why all of the firm’s funds are being placed under review for a possible downgrade of their ratings, Acheson said in a note on Monday.

Whitman, who in 2002 sold a majority stake in his firm to Affiliated Managers Group Inc., remains the chairman of Third Avenue. A management committee now runs the firm after Barse’s exit.

“There’s a concern that Third Avenue was all about Marty Whitman and that they haven’t been able to make the transition to new leadership,” said Glazer of Mayflower Advisors.±±