News | 06.27.19
Liquidity and a ‘Lie’: Funds Confront $30 Trillion Wall of Worry
Mark Carney, the head of the Bank of England, suggests that funds pushing into a host of risky investments have been "built on a lie," after having noted earlier this year that some $30 trillion is tied up in difficult-to-trade investments. The chief concern is that the now-troubled European funds that embraced such investments, only to stumble when investors asked for their money back, are just the tip of the iceberg. Those problems may not be cause for concern in the United States yet, according to Sean Collins, chief economist at the Investment Company Institute. "US mutual funds have a strong record of liquidity management, and their implementation of the SEC’s liquidity management rule has bolstered funds’ practices," Collins says. "Even in the rare cases when a closure is unexpected or sudden, historical experience shows that these events do not have systemic impact on the broader financial markets."
Read the full article on Bloomberg