Jennifer Woods of CNBC.com reported that though most mutual funds have managed to steer clear of the subprime mortgage mess, some with heavy stakes in riskier and shorter-term bonds, asset-backed securities or sizable holdings of value stocks have particularly paid the price.
According to Paul Herbert, senior mutual fund analyst with Morningstar, Fidelity has a number of funds that fall into the troubled asset-backed securities category.
One is the Fidelity Ultra-Short Bond fund, which has about $785 million in assets. The fund has a 37.1% weight in asset-backed securities; as a result, its total return is down about 3% year-to-date, according to Morningstar.com. (Weightings are as of Sept. 30, according to Morningstar.com). Compared with benchmark index, the Lehman Brothers Aggregate Bond Total Return Index the fund is down 7.7 percentage points.
Fidelity Short-Term Bond Fund has also been impacted, though to a lesser extent. This fund, with assets of more than $7.31 billion and about a 16.3% weighting in asset-backed securities, has ticked up about 1.5% this year. Compared to the Lehman Brothers Aggregate Bond Total Return Index, however, it is down about 2.3 percentage points.
“The downside has been pretty severe,” says Herbert, who notes that these funds were pretty good holdings prior to the subprime mortgage meltdown.
There are also a handful of smaller bond funds that have suffered. Topping the list is the $291 million Regions Morgan Keegan Select High Income Fund, which has been among the worst performers in 2007. Year-to-date, this fund, which has a 28.25% in asset-backed securities, is off more than 48%.
If you or someone you know lost money in a subprime mortgage or CDO investment, please contact the attorneys at The Frankowski Firm at 888-741-7503 to discuss your potential legal remedies.