BOSTON — Toxic assets, anyone? The Obama administration’s plan to help banks unload soured mortgage assets isn’t just an opportunity for Wall Street.
Individual investors may be able to get in on the action — that is, if they’ve got the stomach for plenty of risk.
At least three mutual fund companies have already expressed interest in buying the toxic assets and giving fund clients a chance to invest.
“We are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer,” said Bill Gross, a founder and co-chief investment officer of Pimco, manager of the world’s largest bond fund.
Other fund companies said they’re exploring options and awaiting plan details.
The Treasury Department’s plan gives the private sector a role alongside government in removing as much as $1 trillion in bad debt from banks’ balance sheets. The goal is to restore the flow of credit to help usher in an economic recovery.
Much of the interest in buying banks’ soured mortgage investments is expected to come from big institutional investors, such as pension funds.
Other major players will include hedge funds and private equity firms that generally cater to wealthy investors.
But the interest from mutual fund companies marks a new opportunity for the little guy.
However, just because regular folks may be able to invest in a fund that buys toxic assets doesn’t mean it’s a good idea.
“This is no place for Grandma’s money,” said Morici, a business professor at the University of Maryland and former chief economist at the U.S. International Trade Commission.
