Mutual Fund Liquidity Risk Management Tools

Subject Areas : Journal of Investment Knowledge

seyed hossein hosseini ¹ , mohammad hassan ebrahimi sarveolia ² , moslem Peymani ³

1 - PHD candidate of Finance, Fllameh Tabataba'i University
2 - Allameh Tabataba'i University - Tehran
3 - Allameh Tabataba'i University - Tehran

Received: 2021-11-24 Accepted : 2021-12-08 Published : 2023-09-23

Keywords: Mutual Funds, liquidity risk management tools, Liquidity Risk Management,

Abstract :

Due to the continuous cash flow of Open-End mutual funds, liquidity risk is the most important risk of this financial institution. The main challenge of managing the liquidity of these funds is to provide cash in the event of a crisis and to face redemption requests. Fund run and the pressure to finance and sell assets will transfer costs and possibly leave a portfolio of less liquid assets for the remaining investors.it is necessary to use liquidity management tools to control the repurchase pressure, share costs fairly and protect the interests of remaining investors.while reviewing and introducing common liquidity risk management tools of this industry in the world, the need to provide the possibility of using any of these tools for fixed income funds and stocks, the possibility of using any tool in normal and / or special conditions, and the necessity / non-necessity of approval of the use of the tool by the regulator before use, as the three key components of the use of these tools, has been deliberately fuzzily consulted by experts. After sending the questionnaire and during the two stages of the survey, a final agreement was reached by the experts on the use of Swing Pricing and Anti-Dilution Levy in any situation and at the discretion of fund managers and the use of Redemptions In-kind, Redemption Gates, and Suspension of Redemptions in special circumstances and with the approval of the regulator. No consensus was reached on the need to provide the use of Side Pockets.

References:

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1 Autorité des marchés financiers
ابزار های مدیریت ریسک نقدینگی صندوق های سرمایه گذاری مشترک / سید حسین حسینی و همکاران
375 دوره 12 / پیاپی 47 / پائیز 1402
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