Daily Liquid Funds

Overview

There have been a number of high profile incidents where mutual funds for institutional and retail investors have not been able to meet redemption requests with funds being gated to protect the interests of the overall investors.

In an era of very low interest rates, many funds that promise to pay daily liquidity have built up. Many of these funds contain hard to sell assets. If markets start going down some investors will redeem their holdings putting pressure on these products.

This working party will examine the current regulatory environment, for institutional and retail funds promising daily liquidity and any changes being proposed. The working party will also draw parallels to the insurance industry; in particular unit linked funds that promise daily liquidity. The working party will offer ideas on how mutual fund investments can better protect investors from the possibility of not being able to sell their holdings.

Outputs