Please Note: You are viewing the unstyled version of Subprimelosses. Either your browser does not support CSS (Cascading Style Sheets) or it is disabled. As a result, much of this website will not look the way it was intended, although all of its contents will be accessible to you. For more information, visit our Browser Support page.

Skip to Primary Site Navigation, Secondary Site Navigation, Content

Home > Cases > AMF Funds > AMF Funds Overview

AMF Funds

AMF Asset Management Fund: Investors Want Answers

Presented as a conservative, low-risk investment, the opposite was true for AMF Asset Management Fund's Ultra Short Fund. The AMF Ultra Short Fund has plummeted in value in recent months, with investors sustaining significant financial losses.

Despite the fact that the fund's manager, Chicago-based Shay Assets Management, Inc., represented the AMF Ultra Short Fund as “achieving current income with a very low degree of share-price fluctuation,” the ultra short duration fund declined more than 15% this year.

Like a number of ultra short duration funds, the root of problems for the AMF Ultra Short Fund is tied to the breakdown in the housing market and the subprime credit crisis. The AMF Ultra Short Fund was heavily invested in adjustable rate mortgages (ARMs), specifically hybrid ARMs.

Hybrid ARMs provide an initial “teaser” interest rate that is fixed for the first two or three years of the loan. At the end of the fixed period, however, the interest rate adjusts annually, and homeowners may see their monthly mortgage payments climb by 35 percent or more. Unable to afford these higher payments, many homeowners inevitably face foreclosure on their home.

The AMF Ultra Short Fund also had investments in troubled mortgage giant Fannie Mae, the failed IndyMac bank and Bear Stearns obligations, as well as Washington Mutual notes.

Many investors who placed their money in the AMF Ultra Short Fund did so as an alternative to a money market fund, only to suffer substantial losses later on as a result of the fund's heavy concentration of holdings - nearly 50% - in risky hybrid ARMs.

Given the fact that the subprime crisis and the credit crunch have been ongoing for more than a year and the AMF Ultra Short Fund did not begin to seriously decline in value until May 2008, investors want to know why the managers of the AMF Ultra Short Fund would continue to invest in such an inappropriate concentration of mortgage-backed securities.

Their question may be answered in court. A number of investors are taking legal action, charging that the AMF Ultra Short Fund was misrepresented to them and its managers failed to disclose the full extent of the fund's exposure to certain risky mortgage-backed securities. Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.


Return to Cases >


Top