Not all investments in mortgage-backed securities are causing nightmares.
The CRA Qualified Investment Fund returned 1.39% for the quarter ended Sept. 30, outperforming the Lehman Brothers Aggregate Bond index’s -0.49%. The $712 million fund, managed by Community Capital Management, Weston, Fla., has about 70% of its holdings in single-family and multifamily mortgage-backed securities that are government guaranteed, said Todd Cohen, president and chief investment officer.
What the fund doesn’t have is corporate bond and private-labeled mortgage-backed securities holdings. The mortgages held by the fund were marketed to low-income families, but were not for exceedingly large amounts.
“We didn’t want a person making $30,000 a year to have a $350,000 mortgage,” Mr. Cohen said. “It just didn’t make sense. We wanted something that was doable.”
The firm, which has just less than $900 million under management, was launched in 1998 as a way for banks to fulfill Community Reinvestment Act obligations. It now also manages assets for public funds, faith-based investors and foundations. In addition to the mutual fund, the firm manages separate accounts for institutional clients including the $147 billion California State Teachers’ Retirement System, Sacramento, and the $45.7 billion Massachusetts Pension Reserves Investment Management Board, Boston, Mr. Cohen said. — Jennifer Byrd
