Bank of America Corp.'s asset management unit is "winding down" a large, enhanced-cash-yield fund after suffering losses on holdings including short-term debt sold by structured investment vehicles, a company spokesman said Monday.
Columbia Management Group LLC temporarily closed its Columbia Strategic Cash Portfolio fund last week before reopening it Friday as a variable net asset value fund, Robert Stickler said. The fund's assets have shrunk from $33 billion two weeks ago to about $12 billion, he said, as large investors withdrew assets.
The private fund had targeted a net asset value of $1 a share, but unlike a mutual fund, it did not guarantee that amount, he said. On Monday, the fund had a net asset value of 99.4 cents a share. The fund had only been open to institutional investors with at least $25 million of investable assets, and he said clients are either being placed into other Columbia funds or are being allowed to create their own funds, depending on their size.
"The fund had valuation and liquidity issues," he said. "Investors can get their money out today at the 99.4 cents. … This fund had a 5.02% yield over the past year, so they can still get out with more than what they had in principle a year ago."
Executives at the $1.6 trillion-asset Charlotte company had said they would probably commit up to $600 million this quarter to support cash funds that face exposure to structured investment vehicles. Mr. Stickler said that some of this money supported the strategic cash fund, though he would not say how much. There will no longer be a need to give such support now that the portfolio has been converted to a variable net asset value fund.
