REGIONS MORGAN KEEGAN REASSURED INVESTORS THAT IT WAS PROTECTED FROM LOSSES: MOST OTHER BOND FUNDS SAW THE LOSSES COMING
As of late February, the Regions Morgan Keegan Select High Income Fund (MKHIX), a $1.16 billion fund, held roughly fourteen percent (14%) of its portfolio in securities backed by subprime loans. James C. Kelso Jr., manager of the fund, said that he intended to hold onto the subprime investments and discounted concerns of analysts and other professional fund managers.
Kelsoe indicated that the Regions Morgan Keegan Fund was insulated from loss, because of better screening of its investments. Kelsoe claimed that "most of what we're holding is [loans underwritten] between '03 and '05," when subprime lending standards were much stronger. Kelsoe discounted recent losses, stating, "These things go in cycles."
Other analysts warned that default rates could worsen losses. In particular, they warn that the investments are complex, and the stated pricing of mortgage-backed securities might not truly reflect the impact of defaults.
Read the Business Week story:
http://www.businessweek.com/magazine/content/07_26/b4040605.htm
