Mark & Associates, P.C. Attorneys At Law

Charles Schwab YieldPlus Bond Funds

Two of discount stockbroker Charles Schwab’s mutual funds, that were marketed as conservative investments, are down significantly in 2008. The Schwab YieldPlus Investor Fund (SWYPX) is down approximately 17% year to date through March 26, 2008, and the Schwab California Tax-Free YieldPlus Fund (SWYCX) is down approximately 9% over the same period.

The funds were marketed with the objective to "seek high current income with minimal changes in share price." Mark & Associates, P.C. believes that investors were misled about the potential risks of these funds, and is offering free legal consultations to investors who lost money in these funds.

Schwab YieldPlus Investor Fund

The Schwab YieldPlus Investor Fund is an ultra-short bond fund that has fallen due to large investments in mortgage bonds and subprime mortgage backed bonds. The fund declined approximately 3.6% in the second half of 2007, which caused nervous investors to begin fleeing the fund. Morningstar has reported that the fund’s assets have fallen from $13.5 billion in June 2007 to $2.5 billion as of March 20. This aggressive exodus from this fund has allegedly caused the fund managers to sell bonds for depressed prices.

The large loss in the YieldPlus Investor Fund has been shocking to investors. The fund invests in ultra-short term fixed-income securities that should, theoretically, have little risk. However, the funds lead manager invested in bonds that had more credit risk, like subprime bonds, than other similar funds. This explains why the Schwab YieldPlus Investor Fund ranks last in performance of all funds in its category.

Schwab California Tax-Free YieldPlus

The Schwab California Tax-Free YieldPlus Fund (SWYCX) is managed by the same lead manager and the Schwab YieldPlus Investor Fund, and is also significantly down in value. The fund’s investments in variable-rate bonds pegged to the London Interbank Offering Rate (LIBOR) have contributed to its poor performance as the LIBOR index has dropped as liquidity has dried up. Morningstar reports that in March 2008, the fund’s assets were less than $600 million, compared with the mid-2007 level of $1.1 billion.

Legal Rights for Investors in Schwab Funds

 Mark & Associates, P.C. believes Charles Schwab misled investors by making misrepresentations in the marketing materials and prospectuses for these funds.  If you lost money investing these Schwab funds you may be entitled to compensation. Contact Mark & Associates, P.C. today for a free case consultation by submitting the form on the right side of this page or by calling 1-866-50-RIGHTS (1-866-507-4448).