Morningstar tells remaining investors to dump Schwab YieldPlus

Charles Schwab’s money management unit was hardly the only shop burned by putting dangerous subprime-backed investments in supposedly conservative short-term bond mutual funds. Fidelity, Evergreen and others also had losses when the subprime market blew up starting last summer. But the experience of investors in the once almost $14 billion Schwab YieldPlus Fund (SWYPX), who have now lost over 30% of their money, is by far the worst, Morningstar notes in a recent write-up. Once shareholders started heading for the exits, Schwab managers had to sell illiquid assets at the worst possible time, magnifying the damage and making it impossible for the fund to recover if the market ever bounced back.

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