Two Bear funds on verge of breakdown

Two Bear Stearns hedge funds that invested heavily in securities backed by subprime mortgage loans are close to being shut down.
JUN 20, 2007
Two Bear Stearns hedge funds that invested heavily in securities backed by subprime mortgage loans are close to being shut down. Merrill Lynch & Co., one of the fund's lenders, have seized $800 million of assets from troubled hedge funds managed by Bear Stearns, sources familiar with the situation said told Reuters today. The assets of the High Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund are expected to be sold off later today, and are mainly collateralized debt obligations supported by asset-backed securities, said dealers that had seen the list of securities up for sale, according to Reuters. At the same time, the funds' managers is working with several other lenders, including New York-based Goldman Sachs Group Inc. and Charlotte, N.C.-based Bank of America Corp., to pay off the funds' $9 billion in loans, according to The Wall Street Journal. The struggling High-Grade Structured Credit Strategies Enhanced Leverage Fund has suffered from 23% losses through April, due to woes in the subprime mortgage industry and faced demands from creditors to post additional collateral. Late last week, the fund sold off at least $4 billion of mortgage securities, to help pay for client redemptions and expected margin calls (InvestmentNews, June 19).

Latest News

IRA assets swell to $19.2 trillion as 401(k) rollovers drive growth
IRA assets swell to $19.2 trillion as 401(k) rollovers drive growth

IRAs now hold nearly twice the assets of 401(k) plans — and most of that money didn't arrive through annual contributions.

Women feel confident about saving, but many still keep cash in low-yield accounts
Women feel confident about saving, but many still keep cash in low-yield accounts

A new survey finds that many women prioritize financial security but continue to leave savings in accounts that may not keep pace with inflation.

SEC seeks comment on prediction-market ETFs after May pause
SEC seeks comment on prediction-market ETFs after May pause

Roundhill, Bitwise and GraniteShares funds remain on hold while the agency weighs how novel ETFs should be regulated.

Dump investment banks, buy alternative asset managers, says Oppenheimer
Dump investment banks, buy alternative asset managers, says Oppenheimer

"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."

TaxStatus rolls out rules-based tool to flag advice gaps
TaxStatus rolls out rules-based tool to flag advice gaps

The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.