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Home > Cases > Evergreen Investments > Evergreen Investments Overview

Evergreen Investments Overview

In times of market volatility, ultra-short bonds have proven to be a risky investment option for investors wanting a safe haven to park their cash. Persistent credit woes tied to the fallout of the subprime mortgage crisis have created havoc in the ultra-short bond market this year, unleashing a torrent of massive financial losses on investors.

An ultra-short bond fund is a mutual fund that invests in fixed-income instruments with very short-term maturities. As with other mutual funds, ultra-short bond funds can invest in a wide and varied range of securities - and that includes corporate debt, government bonds, subprime mortgages, and other asset-backed securities.

In the past six months, a number of investors have come forth with charges that some fund firms pitched ultra-short bonds as a “low-risk” investment to place emergency funds. In turns out, however, that many of these ultra-short bond funds owned securities tied to the performance of the housing market. When it failed, these bond funds failed, as well.

One of the ultra-short bond funds under investigation is the Evergreen Ultra Short Opportunities Fund (symbol: EUBAX), which has plummeted in value under the weight of securities backed by subprime mortgages. Year-to-date, the Evergreen Ultra Short Opportunities Fund is off more than 16 percent - an astonishing amount for an ultra-short bond fund.

More important, the demise of the Evergreen Ultra Short Opportunities Fund is an example of what can and will go wrong when a fund takes on too many risks with direct subprime exposure.

For investors steered into the Evergreen Ultra Short Opportunities Fund on the basis of its “safety,” only to learn it had large stakes in mortgage-backed securities that were subsequently crushed in recent months, their next move may be made in court.

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.


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