Oppenheimer Funds has become the latest manager to admit losses from one of its investment vehicles, after blaming widening credit spreads for a fall in value of its municipal bond funds range, which accounts for almost $20bn (€14.8bn) of its assets under management.
The range of 10 vehicles, which includes the $8.6bn Rochester National Municipals and $11.2bn Rochester Fund Municipals vehicles as well as eight smaller state-specific funds, have seen significant falls in their net asset values over the last month.
At close of play on Monday, the net asset value of the National Municipals fund fell by 9.2% while the Fund Municipals vehicle fell by 5.4%, according to Bloomberg data.
The funds invest in US municipal securities, which are bonds issued by state and local governments that generally offer interest free from federal and state taxes.
"Over the past several weeks credit yield spreads have widened, resulting in higher yields for lower-rated bonds and, as a result, [net asset value] volatility," said the firm in a prepared statement.
"Both institutional and individual investors have been affected by headlines regarding the sub-prime mortgage market, and both are taking a much closer look at their risk profile. As investors re-evaluate their risk tolerance, many have moved to lower risk investments. This has caused the prices on some higher-risk securities to decrease," it added.
The news comes after investment vehicles around the world have suffered in the wake of defaults in the US sub-prime mortgage market, including hedge funds at Bear Stearns and Goldman Sachs and vehicles managed by BNP Paribas, Macquarie and Australian firms Basis Capital and Absolute Capital.
Oppenheimer did not immediately return calls for comment.
