Charles Schwab Yield Plus Arbitration
Zamansky & Associates is working with investors to recover losses stemming from the mismanagement of bond funds including the previously high flying Charles Schwab Yield Plus Fund (SWYPX) and its sister fund Charles Schwab Plus Select (SWYSX). We are looking into claims that investors were duped into buying into the Charles Schwab Yield Plus fund after the fund was marketed to them as a safe, conservative fixed-income instrument akin to money market accounts.
The reality however, is that the Charles Schwab Yield Plus fund was far from conservative and was weighted with risky subprime assets that created huge losses for the funds investors.
Originally, Charles Schwab filled these funds with a portfolio of highly rated bonds that matured in one-year or so. This was supposedly so that the portfolio could easily unload underperforming assets. But as time dragged on, investors say the strategy wasn’t working and Charles Schwab began to purchase securities tied to higher risk subprime mortgage related assets.
Assets that the managers purchased included illiquid, thinly traded, securities including collateralized debt obligations (CDOs) and other mortgage backed securities. At least initially the plan worked and both the Charles Schwab Yield Plus fund and the Charles Schwab Plus Select fund performed above their benchmark.
But after the subprime mortgage crisis began, the funds’ value plummeted due to its increasingly risky investments. Investors who wanted a conservative fund that preserved their capital experienced large losses, a prospect they couldn’t have predicted given that they were promised a large concentration of AAA assets that would be held in the fund.
It is likely that Charles Schwab’s fund losses will continue. Zamansky & Associates is investigating investor claims and offers free consultations.