Mutual fund suspensions during the COVID-19 market turmoil - asset liquidity, liquidity management tools and spillover effects
Finance Research Letters
; : 103249, 2022.
Article
in English
| ScienceDirect | ID: covidwho-1983086
ABSTRACT
We investigate the drivers and impact of suspending redemptions for European mutual funds. Using a novel data set of funds that suspended redemptions during the COVID19 market turmoil in March 2020, we find that illiquid funds invested in real estate are substantially more likely to suspend than other funds. Suspensions are also strongly correlated with funds’ cash holdings, leverage, age and the availability of ex-ante liquidity tools. We also find that suspensions result in lower inflows for the suspending funds once they re-open and for associated non-suspending funds belonging to the same asset management company, suggesting spillover effects from suspensions.
Full text:
Available
Collection:
Databases of international organizations
Database:
ScienceDirect
Type of study:
Experimental Studies
Language:
English
Journal:
Finance Research Letters
Year:
2022
Document Type:
Article
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