Tags: toxic | assets

You, Too, Can Invest in Distressed Assets

Thursday, 06 Aug 2009 02:49 PM

By Dan Weil

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Many professional investors are trying to score big by investing in distressed bank assets. Soon you will be able to do the same thing.

Investment management firm BlackRock is forming a closed-end mutual fund to let individual investors get a piece of distressed mortgage securities from financial companies, The New York Times reports.

But beware: these are the same assets that caused a crisis for banks in the first place.

BlackRock has filed plans for the fund, BlackRock Legacy Securities Public-Private Trust, with the Securities and Exchange Commission.

To limit risk, the fund will only invest in securities backed by residential and commercial mortgages that were originally rated AAA by at least two ratings agencies before this year.

It would constitute the first fund directed at individual investors to be connected with the government’s program to rid banks of their toxic assets: the Public-Private Investment Program, The Times reports.

The fund came out of talks between BlackRock and the Obama administration about how to let individual investors partake in the government bailouts.

The fund will pool the cash it takes in from investors with a matching contribution from the government. The Times reports that the fund may require initial minimum investments of $5,000 to $10,000.

Investors might do better putting money in BlackRock itself. The firm recently reported strong earnings.

“BlackRock had a very impressive quarter, with very strong flows, especially into equities,” Douglas Sipkin, an analyst with Pali Capital, told Bloomberg.

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