The collapse has cost shareholders--including many funds--billions.
The recently announced federal bailout of mortgage giants Fannie Mae
Although the government's bailout plan has given a boost to the bonds issued by Fannie and Freddie, it has devastated the stocks of the two companies. The stocks had each already fallen around 90% this year when the bailout was announced, and afterward they lost most of their remaining value, trading at under $1 a share by the end of the day on Sept. 8. As recently as October 2007, both stocks traded at more than $60 a share.
This collapse has cost billions of dollars in losses for investors, including many mutual funds. Back in December 2007, when the crisis was still in its early stages (as we can see now), we took our first look at the mutual funds with the biggest percentage of their portfolio in Fannie and Freddie. Then in July of this year, when things had deteriorated and the possibility of a government bailout began to seem real, we revisited the issue. Now that the saga has come to an end, mostly, we thought we would take a final look at the funds most affected by the demise of the GSEs.
First, we'll take a look at the mutual funds with the biggest combined percentage of their portfolios in Fannie and Freddie. The following table shows the top 10, including each fund's category; the size of its asset base; the percentage of the portfolio in Fannie, Freddie, and the two combined (as of the most recent reported portfolio); and its year-to-date return as of Sept. 9.
|Biggest Combined Fannie Mae and Freddie Mac Holdings|
|Fidelity Sel Home Fin
|Touchstone Lg Cp Val
|Morgan Stan Fin Serv
|Thompson Plumb Gr
|AIM Fin Serv
|DWS Dreman Con Val
|Harbor Global Val
|Dreman Cntr Lg Cp Val
|Fidelity Sel Banking
|FNM, FRE % data as of the funds' most recently reported portfolios. Return data as of 09-09-08.|
This is very similar to the July list, except that it reflects more recent portfolios. For seven of these funds, the most recent portfolio is from June 30, while the two Fidelity funds and Dreman Contrarian Large Cap Value
As before, the list consists mainly of financial sector funds and value funds, including two managed by deep-value investing legend David Dreman and a pair managed by the Schneider brothers, John Schneider of Touchstone Large Cap Value
We also thought it would be interesting to take a broader view, and see which fund families as a whole have the most exposure to Fannie and Freddie stock. The following table shows the top 10 families by that measure, with the total combined asset base of each family's mutual funds and the percentage of those assets in Fannie and Freddie, as of each fund's most recent portfolio.