BofA Shuts Massive Money Market Fund

The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $40 billion only a couple months ago currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new investors, it added.

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BofA Shuts Massive Money Market Fund
Monday December 10, 5:37 pm ET
By Ieva M. Augstums, AP Business Writer BofA Closing Beleaguered Money Market Fund That Has Withered From $40 Billion to $12 Billion

CHARLOTTE, N.C. (AP) -- Bank of America Corp. is liquidating an enhanced money 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 $40 billion only a couple months ago 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, Bank of America spokesman Jon Goldstein said.

"The conditions have really weakened the performance across the industry, including this one," Goldstein said.

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 didn't offer investors a guarantee that it would 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.