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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (21760)	8/29/2007 8:26:51 PM
From: Snowshoe	Respond to of 217942

State Street Bond Fund Deep in Red __________________________________ smartmoney.com [Note: I suspect this is the fund that is hurting the Alaska retirement system. -Snow] By Dow Jones Newswires August 28, 2007 NEW YORK (Dow Jones) -- State Street Corp.'s (STT) Limited Duration Bond Fund, which managed $1.4 billion for institutional clients, lost about 37% of its value in the first three weeks of August, the Boston Globe reported on its Web site Tuesday, citing an investor. The investor also told the newspaper that the fund, which is managed by State Street Global Advisors, had plunged 42% for the year as of Aug. 21. "Both the level of (our) underperformance and the degree of market turmoil are unprecedented in our 30-year history as a fixed income manager," State Street executive Sean P. Flannery wrote in an Aug. 14 letter to clients, the Globe reported. According to the report, the fund's big losses may have been been caused by investments in mortgage-related securities, and leveraging, which magnified the problems. The Globe cited Flannery's letter as describing a fund that "increasingly focused on housing-related assets." Meanwhile, the fund borrowed to increase its portfolio to between two and three times the amount of money clients had invested in State Street, according to an investor. The State Street Limited Duration Bond Fund was created in 2002 as a way to generate better results than those of money-market funds with only slightly more risk, the newspaper reported. The fund was widely considered an "enhanced cash" product, an investment category usually considered very low risk. It was sold only to institutional clients, not individual investors, the Globe said. State Street officials declined to discuss anything about the fund, the Globe reported. But Flannery described difficult investment conditions in his letter to clients. "This market situation is extreme and challenging to manage," he wrote. "While we believe that the home equity-linked markets clearly convey far greater risk than they have historically, we feel investors must take into account the downside of forced selling in this chaotic and illiquid market." State Street shares slumped 4% amid Tuesday's market decline. In addition to the fund losses, investors were rattled by reports that the bank holds almost $29 billion in asset-backed commercial paper "conduits," vehicles that finance commercial and retail loans with funds raised in the market for short-term corporate debt.

To: Snowshoe who wrote (21760)	8/30/2007 3:49:42 AM
From: elmatador	Read Replies (1) \| Respond to of 217942

A nation of outlaws. A century ago, that wasn't China -- it was us? boston.com

To: Snowshoe who wrote (21760)	9/1/2007 3:45:59 PM
From: Snowshoe	Read Replies (2) \| Respond to of 217942

My local paper has now reported the losses in the Alaska state retirement system from cratering asset-backed securities. This is a relatively small amount in a single fund, but I expect there are considerable losses in pension funds around the country... State agency yanks investment RETIREMENT FUND: Loss of $6 million prompts board to take action. adn.com By ELIZABETH BLUEMINK ebluemink@adn.com Published: August 30, 2007 Last Modified: August 30, 2007 at 02:27 AM Alarmed by a severe dip in the value of an investment tucked in about 1,000 state workers' retirement portfolios, the Alaska Retirement Board has terminated the investment option. The board lost faith in the fund's managers, said Department of Revenue spokesman Brian Andrews. The board is consulting with Alaska Department of Law to find out if a legal claim for damages could be filed against the fund's manager, Boston-based State Street Global Advisors, he said. The total value of state workers' participation in the poorly performing investment -- the Daily Government/Corporate Bond Fund -- dropped about $6 million in value this summer, from $36 million to $30 million, according to the Revenue Department. The performance was more than 20 percent below an index of comparable investments. This sort of investment option is intended as one of the least risky among the options available in the state's retirement plans, according to the Department of Revenue. The bulk of the loss occurred this month, Andrews said. The board deleted the investment option on Aug. 24. "The Department of Law has been involved with this whole process. They are looking at what the damages may or may not be and what liabilities are associated," Andrews said. The sharp decline in the fund's value may be linked to its investment in mortgage-backed securities, which have been hit hard on Wall Street this month due to the national subprime home loan crisis. About 1,100 current and former state workers were invested in State Street's bond fund, according to the Department of Revenue. The impact to workers is that every dollar they had invested in the fund at the beginning of the year has since shrunk to 86 cents, Andrews said. The ARM board directed that all money invested in State Street's bond fund be transferred to the Barclays Lehman Brothers Government/Credit Bond Index Fund. The Alaska Permanent Fund -- the state's oil wealth savings account -- has not made any changes in its investments due to the mortgage woes that have rocked the stock market in recent weeks, according to Permanent Fund officials.