MORGAN KEEGAN MUTUAL FUNDS SUFFER HUGE LOSSES BECAUSE OF EXPOSURE TO SUBPRIME LOANS
The year-end performance statistics are in and there are no huge surprises. Equity mutual funds made lackluster gains, and stock funds with mortgage or financial company holdings suffered losses. The worst sectors were financials and mortgage companies.
However, some funds suffered far more than the average losses, among them the Regions Morgan Keegan family of funds. “The worst-performing bond fund was the $190 million Regions Morgan Keegan Select High income, which plunged 59 percent because of losses tied to subprime mortgages” according to Bloomberg.com.
What can we learn from this? We know that these Morgan Keegan Funds were overexposed to subprime mortgages, and that their managers did not take the proper steps to mitigate the decline. Other bond funds were able to weather the subprime decline; the Regions Morgan Keegan funds were an exceptional case of mismanagement.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ainZkO4sUAtA
