Deutsche, Fubon attempt Taiwan bond fund cleanup

Jan 28, 2005

Is there a way to prevent a drop in bond fund NAVs - and hence another market crash - as interest rates go up?

Deutsche Bank and Fubon Securities Investment Trust (Fubon SITE) are finalizing a deal to pioneer a way to clean up Taiwan's precarious mutual funds industry, imperilled by huge amounts of investments by bond portfolios into structured notes that will lose money as interest rates go up. Market participants worry that falling NAVs could spark a market crash similar or worse to one experienced last summer when investors redeemed $8.8 billion in the space of just three days.

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