Search Results

Total Results: 

Loan Mutual Fund Liquidity Risk Management: A Case Study

Observers have queried whether syndicated loans, which often take longer than three days to settle, belong in open end mutual funds that permit daily redemptions by investors. The concern, which was the subject of debate in 2016 when the SEC issued its open end fund liquidity risk management rule[1] (“the Rule”), is that loan funds may not be able to meet redemptions due to settlement delays.

Understanding Loan Mutual Funds and Liquidity Risk Management

Recently, questions have been raised about the liquidity of loan investments and whether loan mutual funds are an appropriate investment vehicle for loans. In fact, that question was answered late last year. In fourth quarter 2018, loan mutual funds and ETFs underwent a “natural experiment” as loan prices declined five points and funds experienced nearly $20 billion of redemptions in short order.

Become a Member

Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.

View a list of all members.

Our Partners

cusip-global-services-vector-logo.svgFitch Group logoRefinitiv-(March-2019)SP-Global-Market-Intelligence

Search Results by Relevancy

LIBOR: The Future of Forward Looking Term SOFR

The syndicated loan market would really like an IOSCO-compliant Forward Looking Term SOFR to develop. If such a rate developed, it would solve several problems inherent in SOFR.