Recent high-profile episodes have been a vivid reminder of the liquidity risk that exists in the world of funds but what can investors do to analyse and guard against it? Gill Hutchison takes a closer look
Recent high-profile events in the world of investment funds have reminded us of the risks fund managers run by allocating to less liquid investments. Understandably enough, the focus has been upon the liquidity issues surrounding unlisted stocks yet questions can also be asked of more mainstream and listed assets, where liquidity is not always what it seems. In the high-profile case of the Woodford Equity Income fund, the vicious circle of redemptions and liquidity issues that has emerged in recent weeks occurred because the fund size was permitted to grow too large in the context of the...
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