Troubled assets and mutual funds are terms that aren’t often yoked together, at least not in marketing campaigns. Yet three new closed-end mutual funds have made investing in such assets a selling point.
The funds — two from Nuveen Investments and one from Legg Mason — are the primary retail participants in a federal government program started last year to bolster the market for distressed mortgage -backed securities. As far as that broad goal goes, the effort has been relatively successful. The commercial mortgage-backed securities component of the Barclays Capital U.S. Aggregate Bond Index, a gauge of the market, rose 19.3 percent this year through Sept. 30.
This is an ingenious business plan not only for the firms purchasing but additionally for the economy. Nuveen Investments and Legg Mason are likely able to buy into these funds at a low rate and their participation will help the funds regain traction.
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