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College Savings Plans Hit Hard by Oppenheimer Fund Loss
The Oppenheimer Core Bond fund fell 36% last year, versus a loss of about 5% for the average intermediate-term bond fund, according to Morningstar, USA Today reports. Morningstar said the losses stemmed from the management team’s decision to take big bets on mortgage-backed securities and credit default swaps, according to the newspaper.
Programs affected include:
- The Texas College Savings Plan – Its blended age-based portfolio for children 18 years and older has 50% of its assets in the fund. The portfolio fell 21% in 2008.
- ScholarsEdge, a 529 plan offered by New Mexico – It has 25% of its age-based portfolio for children 18 and older invested in the fund, according to the plan prospectus. That portfolio dropped 17% last year.
- Maine ‘s NextGen College Investing Plan – It offers a balanced fund portfolio that has 40% of its assets in the fund. Through November 28, the most recent information available, according to USA Today, the portfolio was down more than 42%.
- Oregon ‘s College Savings Plan – It has 20% of its ultra-conservative portfolio — aimed at parents of children who are in college — in the Core Bond fund. That portfolio fell 9% last year.
Kevin Deiters, director of educational opportunities for Texas’ comptroller’s office, told the newspaper state officials are disappointed in the fund’s performance but have not made any decisions about whether to replace it. Michael Parker, executive director of Oregon’s College Savings Network says it has launched an investigation with the state attorney general’s office to determine whether Oppenheimer misled investors.
Oppenheimer has installed new leadership for the fund’s management team, spokeswoman Jeaneen Pisarra told USA Today via an e-mail.
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