Growing Unease as British Mutual Funds Block the Exit Doors
Source: New York Times
JULY 7, 2016
As one British mutual fund after another bars its doors to fleeing investors, traders and regulators alike are asking the same question: What does it mean for nervous global markets?
This week, six asset management firms in Britain decided to refuse, for the moment, cash demands from those seeking to escape funds that invest in commercial real estate in the country. The rush for the exits followed the unexpected decision by British voters to leave the European Union.
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Yet to see, in real time, fund companies turning away investors because they cannot quickly unload assets that are hard to sell brings to life a nightmare situation that has long kept central bankers and large investment managers awake at night.
The market has gotten crowded, said Ken Monaghan, an investor in high-yield bonds for Amundi Smith Breeden, a global investment company that manages $1 trillion. At some point you have to wonder what happens if all these investors decide to go home.
Read more: http://www.nytimes.com/2016/07/08/business/dealbook/growing-unease-as-british-mutual-funds-block-the-exit-doors.html
Kelvin Mace
(17,469 posts)Apparently no one learned any lessons from the Great Recession.
woundedkarma
(498 posts)And it'll be time to buy, right?
Kelvin Mace
(17,469 posts)Check my math, but £20 billion of £35 billion is not a "small" number, it is 71%!!
dixiegrrrrl
(60,010 posts)Essentially what has happened since 2008 is that money as value has become nothing more than binary figures on a screen.
All these people who are SO SO rich, from funds, forget that funds are made up of IOU's, of one sort or the other.
It's been debt as money for the last 30 years. And there IS a place and a time when the people who owe the debt stop paying.
And been kept pretty much a secret to those who don't read money news.
Here's the real question:
I'm an investment bank.
I know Brexit is an issue for the last year, and I know the election/decision is going to be made at some date in a few months.
But I don't figure out which decision will impact which funds in my company, and prepare for it ????
Apparently most of them did not.
Interestingly, George Soros did, and shorted certain markets about a week before the vote.
Kelvin Mace
(17,469 posts)With a vengeance.
dixiegrrrrl
(60,010 posts)and worse yet, that it would "break the dollar" pledge of not letting fund value drop below 1.00.
That was and is unprecedented.
Which was the same as saying "shit's gonna hit and we will do this and more if it and when it hits".
took out my retirement account the next day.
CreekDog
(46,192 posts)it was a disastrous vote for the UK economy and for the interests of Scotland and Ireland (Northern Ireland and Republic of Ireland).
Kelvin Mace
(17,469 posts)And Brexit is the needle to the bubble.