by Calculated Risk on 11/14/2007 06:15:00 PM

UPDATE: from Reuters: GE says outside investors quit bond fund

All outside investors ... withdrew their money after the company offered them the chance to redeem their holdings at 96 cents on the dollar ...

From Andrew Bary at Barron's: Mortgage Woes Damage a GE Bond Fund. (hat tip barely)

Barron's reports that a short-term institutional bond fund managed by GE Asset management has offered investors 96 cents on the dollar.

The GE fund, totaling $5 billion, is an "enhanced" cash fund, meaning it seeks to provide a slightly higher yield than a money-market fund while preserving principal and maintaining an asset value of $1 per share.
...
In a Nov. 8 e-mail to institutional holders of the fund, GE Asset Management cited "extreme conditions in the credit markets" and told investors that "it will soon begin to sell certain securities held in the Fund which will result in realized losses and likely bring the Fund's yield to zero."

In the e-mail, GE Asset Management said the fund has "sufficient liquidity to redeem all non-GE subscribers at the current net asset value (.96) ..."

The one year return of 5.49% (through June 30th) probably seemed pretty attractive for short term money - until now!