Bank of America Corp. is liquidating a privately placed, enhanced institutional cash fund amid withering losses on complex asset-backed securities, the bank said Monday.
The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $34 billion on Nov. 30, currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new investors, it added.
The loss is related to the subprime-mortgage crisis that has rippled across the globe, Goldstein said.
"The conditions have really weakened the performance across the industry, including this one," Goldstein said.
Columbia Management approached some of the biggest investors in the fund to redeem "in kind," which means they get their share of the fund's assets put into a separately managed account managed by Columbia, according to Jon Goldstein, a spokesman for Bank of America.
The enhanced money fund was a short-term investment pool that offered higher yields than a traditional money-market fund. It had some money invested in so-called structured investment vehicles, or SIVs, which have been buffeted by this year's credit crisis.
Unlike traditional money-market funds, the Strategic Cash fund was not required to maintain a $1-per-share net asset value, although the fund was managed toward that goal, Goldstein said.
The Strategic Cash portfolio was open only to investors with a minimum of $25 million or more. Columbia Management is the bank's Boston-based asset management arm.
Bank of America shares rose $1.27, or 2.8 percent, to $46.64 Monday.