martes, 31 de marzo de 2015

martes, marzo 31, 2015
Heard on the Street

Bond Funds’ Liquidity Presents Market Concern

Bond funds may be relying increasingly on investors who can take their money out at any time, creating another risk for financial markets

By Paul J. Davies 








Across all asset classes, the total amount in funds that can be withdrawn on a daily basis has grown 76% since 2008, the study found. Funds with daily redemption now make up 46% of the global investor base compared with 43% in 2008. In U.S. credit the numbers are more stark: global mutual funds offering daily liquidity have almost doubled their share of that market from 11% in 2005 to 21% at the end of 2014.

At the same time, the pattern of what companies are issuing to the market has changed in this world of very low interest rates. Risker companies can borrow more easily, but also safer companies can borrow for longer for less.

In Europe, for example, the share of investment grade corporate bond issuance with a maturity of more than 10 years has grown from 6.4% in 2011 to more than 25% at the end of 2014 and an incredible 38% so far this year, according to Société Générale. Longer-dated debt tends to be less liquid than shorter-term bonds.

Asset managers aren't like banks: they don't put their own capital at risk in the same way, but only deliver the results of market performance to their investors. Also, bonds should always be easier to sell than bank loans.

However, mutual fund investors are like the depositors of the capital markets, only they don’t have the safety net of national insurance schemes to protect and therefore pacify them. That means volatility could more easily become real turmoil.

0 comments:

Publicar un comentario