The Evergreen Ultra Short Opportunities Fund has outperformed many other ultra-short bond funds—and weathered the subprime crisis quite well—by shifting assets toward higher-rated mortgage bonds and pass-through securities, according to The Wall Street Journal.
The subprime mortgage crisis has hurt everything from mortgage-backed securities to bond-focused mutual funds, but a well-timed bet that the yield curve would steepen and a diversification in foreign currency bonds helped Evergreen stay ahead.
“I wish I didn’t own any mortgage-backed securities, but that wouldn't have been practical, given that it is our area of specialization,” said Lisa Brown-Premo, manager of mortgage-backed and structured products at Evergreen subsidiary
The $947 million Evergreen fund has had a total return of 3.4% this year, one percentage point above the average return for its category, according to
Ultra-short funds try to generate yields well above those of money-market funds by buying corporate and mortgage-backed securities and structured securities. Some of these funds—particularly structured securities—were hit hard by the summer market turmoil.
Fortunately for Evergreen, the fund held less than 10% of its portfolio in structured securities and was able to minimize market impact by shifting assets to higher-rated mortgage bonds, including Aaa-rated, agency-backed collaterized mortgage obligations.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
