AMF Ultra Short Fund Subject of Investigation
Hit hard by the subprime crisis fallout, Asset Management Fund’s Ultra Short Fund is going the way of a number of ultra short bond funds this year: down the tubes.
Pitched as a conservative, low-risk investment that mimics the safety of money-market funds, the AMF Ultra Short Fund proved to be the opposite for investors. Heavily invested in toxic subprime-backed securities - in this case, hybrid adjustable rate mortgages (ARMs) - the fund plummeted in value when things began to go haywire in the housing market.
Most unsettling to irate investors who put their money into the AMF Ultra Short Fund is the fact that it did not begin to truly decline in value until May 2008, yet until that time, its managers - Shay Assets Management, Inc. - continued to invest heavily in the risky hybrid ARMs.
A hybrid ARM offers a combination of adjustable-rate and fixed-rate features. For an initial period - typically one to three years - it carries a fixed rate, followed by rate adjustments once every year for the balance of the loan term. Many people who sign up for hybrid ARMs do so to reap the benefits of the fixed-rate period. However, at the end of the fixed-rate period, many of these same homeowners are unprepared to see their monthly mortgage payment jump upwards of 30 percent or more.
In its product literature, AMF Asset Management describes its Ultra Short Fund as designed to provide current income with a very low degree of share-price fluctuation. Instead, the fund has declined more than 15% this year.
Several investors who suffered losses in the AMF Ultra Short Fund are going to court, charging the fund’s managers and AMF with not only misrepresenting the fund but also for knowingly keeping information from them about the concentration of risky mortgage-backed securities that the fund contained.
Our affiliation of securities 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.
