MSCI warns of €1bn-plus funds running liquidity risks

first_imgRoughly 1% of large, equity-based UCITS investment funds have less than half of their portfolios invested in highly liquid assets, raising questions about their ability to meet high levels of investor redemptions, according to analysis by MSCI.The data firm reviewed about 400 UCITS funds with assets of more than €1bn and found that seven held more than 15% in illiquid assets, while “approximately 1%” had less than half invested in “highly liquid” assets.Laszlo Hollo, a vice-president in MSCI’s risk management and liquidity core research team, wrote in a blog post earlier this month that applying stricter US liquidity rules highlighted a risk of misalignment between the requirements of clients and the ability of fund managers to meet redemptions.“Misaligned liquidity can be a risk for both institutional investors and fund managers,” Hollo said. “For institutional investors, a potential liquidity mismatch may prevent them from withdrawing their capital upon request, while suspension of withdrawals may harm a fund manager’s reputation. “Even though most of the analysed UCITS funds seemed sufficiently liquid, there were a handful with relatively large exposure to liquidity risk.”UCITS funds do not have a strict limit on illiquid holdings, but managers must provide investors the ability to trade at least every two weeks. Many funds permit withdrawals daily. In the US, open-end investment funds cannot hold more than 15% in illiquid assets. Neil Woodford, Woodford Investment ManagementMSCI’s research was conducted in the wake of the high-profile suspension of the LF Woodford Equity Income fund, which stopped investors from withdrawing their money at the start of June after months of high levels of redemptions.Kent County Council’s £6.2bn (€6.9bn) pension fund – one of few institutional investors in the fund – attempted to withdraw its stake but was denied when the fund closed on 3 June.The Woodford fund has yet to reopen. In a statement published on 1 July, Link Fund Solutions – the independent monitor and administrator for the fund – said it had extended the suspension for another 28 days to allow portfolio manager Neil Woodford to reposition the fund’s portfolio into more liquid assets.The UK’s Financial Conduct Authority has promised to revisit illiquid asset rules for investment funds following the Woodford suspension.Last month, Bank of England governor Mark Carney warned that funds with daily liquidity that invested in illiquid assets were “built on a lie”, giving rise to a “structural” problem that had implications for retail investors.“The Woodford fund highlighted the importance of keeping an eye on a fund’s liquidity profile as a key component of managing risk,” MSCI’s Hollo said.last_img read more

Police Arrest Man Accused of Killing Dog, Smashing Girlfriend’s Car with Sledgehammer

first_imgA Lauderhill man who is accused of using a sledgehammer to smash his girlfriend’s car and then kill a dog is now behind bars in Broward County.Police arrested 33-year-old Darrien Gyrone Green late last week. Court records show that he is facing charges of animal cruelty causing death, robbery with a weapon, aggravated assault, and probation violations for prior stalking charges.The arrest affidavit states that Lauderhill police responded to the 700 block of Northwest 34th Avenue just before 6:30 p.m. on February 1.That is when Nikia Gethers-Ponder told them that Green, the father of her child, had shattered the windows of her BMW, but she did not want to discuss it with them any further.According to the affidavit, two other women were walking their dogs in the area at the time of the incident and heard the sound of banging. They saw a man, who was later identified as Green, smashing a car and then running past them while holding the sledgehammer.As one of the women took a photograph of Green with her phone, he approached her and shouted, “You taking pictures of me?” That is when Green reportedly raised the hammer above his head in a threatening manner and took away her phone.The other woman’s two-year-old female Yorkie/Poodle mix started barking, and Green struck the dog with the sledgehammer before running away, the affidavit states.The dog was gasping for air and bleeding from its mouth. Police say the pet was dead by the time it arrived at Coral Springs Animal Hospital.Although officers set up a perimeter around the area, they were unable to find Green at the time. He was arrested last Friday at a house in the 2300 block of Northwest 15th Street in Fort Lauderdale.Green was ordered held without bond in the Broward County Jail during his first court appearance.last_img read more