Panic Attack

From this morning's Boston Globe:

A supposedly conservative bond fund managed by the investment arm of State Street Corp. lost more than a third of its value in a matter of weeks amid the turmoil in credit markets this month, according to an investor who has seen the returns.

Now that's the kind of newspaper story that makes you sit up and take notice, especially if you have a ton of money in nice conservative bond funds. A quick trip to view my various accounts reveals nothing amiss (in fact, things are doing pretty well, all things considered).

Turns out that the fund in question was intended to be a juiced up money market fund:

The State Street Limited Duration Bond Fund was created in 2002 as a way to generate better results than those of money-market funds with only slightly more risk. The fund was widely considered an "enhanced cash" product, an investment category usually considered very low risk. It was sold only to institutional clients, not individual investors.

Another good reason to...

• Read those fund prospectuses and annual reports, both before and after you buy
• Be glad you don't have enough money to invest in a hedge fund
• Avoid investing in funds run by really, really smart people