ESMA points to HY, EM risk to fund redemption shock

By Jasper Cox
05 Sep 2019

High-yield bond funds are a lot more exposed to a liquidity shortfall than funds for other asset classes, according to a stress test developed by the European Securities and Markets Authority (ESMA). The publication of ESMA’s results came in the same week as a Bank of England official discussed solutions to fund fire-sales.

Scrutiny of the liquidity of funds and their ability to cope with significant redemptions has increased after a series of high-profile incidents.

GAM stopped redemptions in an absolute return bond fund last year after a high level of requests, and the fund has been liquidated. This year, ...

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