Oct

4

Colleges Affected as Investment Funds Freeze

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Two investment funds from Commonfund issued freezing orders for most withdrawals last week, thus posing possible financial difficulty for almost 1200 colleges and schools which had invested in the funds.

The Commonfund Intermediate Term Fund was the latest to announce that its clients could make only 30% withdrawals at present while the rest would be possible only when market conditions improve. The investment fund holds $1 billion in assets for around 200 schools and colleges. The fund had invested at least half this amount in mortgage and other asset-backed securities which have taken a heavy hit in the recent market meltdown.

On Monday, Commonfund Short Term Fund became the first investment fund for educational institutions to announce that it was partially freezing withdrawals. This fund holds assets worth $9.3 billion and was used by around 1000 schools and colleges for immediate requirements like payrolls. The termination of the short-term fund was due to the failure of its trustee, Wachovia Corp which announced that at present, investors would be able to withdraw 33% of their funds while the rest may be withdrawn in instalments through 2011. Among those who had invested in the short-term fund are Bethany College in Kansas, Macalester College in Minnesota, Simmons College in Boston, Grinnell College in Iowa and Middlebury College in Vermont.