Corporate bond funds could be the next victims of a liquidity crisis, as they grow larger and invest in increasingly less liquid securities, according to Allianz Global Investors' Mike Riddell.
The gating of commercial property funds in 2016 and LF Woodford Equity Income in 2019 have raised concerns over the liquidity of open-ended funds offering investors daily dealing but investing in illiquid assets. However, liquidity issues in bond funds pre-date this, Riddell highlighted. In late 2015, some US high-yield funds were unable to meet investor redemptions. "I remember meeting the International Monetary Fund in 2012 and they were saying the biggest three risks in the global economy are China, political risks and market liquidity," he added. Riddell, who manages a suite of...
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