SHORT-TERM INSTITUTIONAL BOND RUN MANAGED by General Electric Asset Management apparently has suffered losses in mortgage and asset-backed securities and is offering investors the option to redeem their holdings at 96 cents on the dollar.
The setback at GE Asset Management’s GEAM Trust Enhanced Cash Trust is the latest in a series of problems encountered by money-market and short-term bond funds from the turmoil in the mortgage and asset-securities markets.
Legg Mason, Wachovia and Bank of America have had to provide financial support to their money-market funds to prevent their funds from “breaking the buck,” or falling below the $1 asset value that money funds seek to preserve.
The GE fund, totaling $5 billion, is an “enhanced” cash fund, meaning it seeks to provide a slightly higher yield than a money-market fund while preserving principal and maintaining an asset value of $1 per share.
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