Oppenheimer Champion Income Fund

Print Friendly, PDF & Email

The Oppenheimer Champion Income Fund, which was supposed to be a high yield bond fund, lost 78% of its value in 2008. The losses stem from concentrations in sub-prime debt, subordinated tranches of collateralized debt obligations, swap contracts, and other high risk investments. The Oppenheimer Champion Income Fund's dramatic decline led to the resignation of Oppenheimer Senior Vice President and Champion Income Fund manager Angelo Manioudakis in December.

The Oppenheimer Champion Income Fund was marketed as a relatively safe, income-generating mutual fund. However, the Oppenheimer Champion Income Fund managers exposed investors to derivatives, collateralized debt obligations, and other volatile investments. These risky investments were also highly leveraged, resulting in additional volatility.

As a result, a mutual fund marketed as a relatively safe income generating investment became an extremely risky, leveraged security. By December 2008, when the Fund disclosed its losses relating to Lehman Brothers and AIG, many investors who had sought stable, income-generating investments had witnessed a dramatic drop in the value of their investments.

The volatile and untested positions resulted in significant losses for many investors who were seeking stable fixed income. Investors were led to believe that the Oppenheimer Champion Income Fund would provide consistent income with low risk but instead found their portfolios lost value because of complex and volatile securities. If your financial advisor at Oppenheimer & Company recommended the purchase of the Oppenheimer Champion Income Fund, you may have a claim.