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Axa IM - US MBS, with significant subprime exposure

2007-08-02

Count of distinct funds: 2

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stories: ft.com

This Paris-based capital manager has run into trouble with its two "US LIBOR Plus" funds. It says the funds are 41% exposed to the US subprime sector, and both fell 21% in July. To preserve investor liquidity and help staunch a firesale in the market, the fund is putting up its own cash, a very extraordinary step. The funds have about US$712m in total.

Amusingly:

Axa insists that the funds were not invested in subprime investments that have recently been downgraded.

Fweew... they must be safe then!

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Important: This fund is on our list of hedge funds that are apparently ailing or which we think are worth watching for any other reason. Ailing funds haven't shut down, but they've suffered significant value declines and/or temporarily halted redemptions. Funds on watch may not even have unusual declines, but may be posted if it is felt there may be risk of developing a more serious condition eventually.