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Erscheinungsjahr: 
2024
Schriftenreihe/Nr.: 
Deutsche Bundesbank Discussion Paper No. 36/2024
Verlag: 
Deutsche Bundesbank, Frankfurt a. M.
Zusammenfassung: 
We study the role of liquidity management tools (LMTs) in mitigating financial fragility in investment funds during the COVID-19 market distress. We employ a unique dataset that reports the availability of different types of LMTs in a sample of Irish-domiciled corporate bond funds. We find that funds with access to price-based tools such as redemption fees or anti-dilution levies experienced lower net outflows in March 2020, as compared to funds with only quantity-based tools such as redemption gates, temporary suspensions, or redemptions in kind. This difference is stronger among funds with a high sensitivity of flows to past performance and reflects both higher gross inflows and lower gross outflows during this episode. Funds with price-based LMTs also rebalance their portfolios towards less liquid bonds. This portfolio rebalancing results in a lower price decline of bonds held disproportionally more by funds with price-based LMTs in our sample of Irish-domiciled funds.
Schlagwörter: 
liquidity management tools
investment funds
COVID-19
financial fragility
JEL: 
G2
G23
ISBN: 
978-3-98848-011-8
Dokumentart: 
Working Paper
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