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Evergreen Investments CEO to Retire

Evergreen Investments, the mutual fund operation and money-management unit of Wachovia Corp., will soon get a fresh start. The company announced Tuesday that Chief Executive Dennis Ferro will retire at the end of this year, just five years after assuming the position. Peter Cieszko, Evergreen employee since mid-2006 and current head of global distribution, will be his successor.  

In August, Evergreen Investments also plans to fill the abandoned chief investment officer position with David Germany, a former investment manager for Morgan Stanley. Ferro was the interim fill in after former CIO Chris Conkey unexpectedly left last year.  

Wachovia seems to be following in the footsteps of Evergreen with “top-level” struggles. The bank’s CEO G. Kennedy Thompson was ousted last month due to substantial losses and write-downs. These leadership changes come in the midst of struggles for Evergreen.

In the past year their funds’ mortgage- and asset-backed investments have been overwhelmingly troublesome.  Wachovia was forced to step up and buy such securities from Evergreen’s money-market funds to prevent them from breaking the buck – – when their net asset value per share falls below the $1 money market standard. The bank also reported a loss of over $40 million on the asset-backed securities purchased from Evergreen’s money funds.  

Last month, Evergreen was forced to liquidate one of its bond funds, Evergreen Ultra Short Opportunities Fund, because it lost half of its value in a mere six months due to subprime mortgage investments.

Evergreen’s closed-end funds, like many others, have suffered from the auction-rate preferred securities they issued. The investors of these securities were unable to withdraw their money when the market froze up in February.  

Mr. Cieszko claims the main reason for the mutual-fund investor evacuation is that, in recent years, Wachovia’s wealth-management unit started using non-Evergreen funds. Some Evergreen funds were even removed from of the Wachovia wealth-management operation since they were not “top of class”. According to a July 8, 2008 Wall Street Journal article by Shefali Anand, Evergreen’s mutual funds have had net outflows of nearly $10 billion since beginning of 2008. It now has $41.5 billion in fund assets and manages $258 billion overall.

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