BlackRock Inc. announced that it is launching a fund to enable small investors to buy bank assets tied to distressed commercial and residential nonagency mortgage-backed securities through the Treasury Department's Public-Private Investment Program.
A prospectus for the BlackRock Legacy Securities Public-Private Trust was filed Friday with the Securities and Exchange Commission but does not specify the size of the fund. Brokers who sell the fund will determine the entry fee and other requirements for investors to participate.
The fund's objective "is to generate attractive returns for shareholders through long-term opportunistic investments in assets eligible for purchase" under the PPIP.
The fund will combine the money raised from investors with a matching equity contribution from the Treasury and tap its special financing for PPIP participants.
To minimize investor risk, the fund will deal only in securities linked to mortgages that were originally rated triple-A by at least two rating agencies before 2009. Per Treasury rules, at least 90% of any asset slated for purchase must be situated in the U.S.
BlackRock said that it will charge half of its usual management fees for the fund, according to the prospectus.