The Wall Street Journal reports today that Charles Schwab’s clients are the latest victims of, “reaching for yield:”
Schwab YieldPlus, once the company’s most popular bond fund, had pitched itself as a safe alternative to cash. But it stuffed mortgage-backed securities into its portfolio to pump up performance, and they have turned toxic. YieldPlus has lost 24% so far this year, while the average so-called ultra-short bond fund is down just 1.9.
It turns out this fund was far from the, “cash equivalent,” I’m sure most of its investors used it for. Moral of the story: make sure your cash is really cash.
Source:
Schwab Fund Pitched Safety, Courted Danger
Diya Gullapalli
Wall Street Journal