Should Investors Bite on BlackRock's New PPIP Fund?
BlackRock touts the fund as an opportunity for individuals to grab a piece of the action, but investors should know what they're getting into.
On Friday, BlackRock announced plans to allow individuals to invest in the Public-Private Investment Program, or PPIP, which aims to remove toxic assets from banks' balance sheets. BlackRock plans to launch a closed-end fund called BlackRock Legacy Securities Public-Private Trust, which it hopes will trade on the New York Stock Exchange.
According to the prospectus, the fund's objective is to "generate attractive returns for shareholders through long-term opportunistic investments in assets eligible for purchase under the PPIP." The fund will invest primarily in commercial and residential mortgage-backed securities, which must have been issued before 2009 and originally rated AAA or equivalent by at least two agencies. Current ratings are not a limitation, and may be lower.