BoE: Fund liquidity mismatches could 'amplify shocks in the financial system'

May also impact the provision of finance to the economy

Mike Sheen
clock • 4 min read

Liquidity mismatches in open-ended funds, such as that seen in the property sector and in the case of the Woodford Equity Income fund, poses a threat to financial stability and could “amplify shocks in the financial system”, the Bank of England (BoE) has warned.

In its annual Financial Stability Report, published on Monday (16 December), the BoE said such mismatches, which is not unique to "any single market or fund type", could lead to forced sales which may also impact the provision of finance to the economy. Contagion risk on cards for property funds following M&G suspension, experts warn The Bank's report noted the risk in relation to the suspension of the Woodford Equity Income fund in June, as well as the more recent M&G Property Portfolio gating and those seen in the open-ended property fund sector in the wake of the 2016 Brexit refere...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

Trustpilot