The Midnight Sun - Follow Up
It would seem that Matt King at Citi is of more or less the same opinion regarding transitional liquidity "market making" and funds not being banks or "the narrowing of exits". The report is called "The Liquidity Paradox" and received good coverage at Zero Hedge.
"King points to the fact that flows into mutual funds may be setting the stage for a veritable maturity mismatch massacre, as investors move from money market funds to long-term funds"
"Investors have seen mutual funds as a substitute for cash, and raises the worrying possibility that they might potentially decide to sell them en masse if risk appetite were to wane or yields on cash were to become more attractive."
"In recent years, the growth in their (Pension, Insurance, long term bond holders) bond holdings has not kept pace with that of mutual funds, households and foreign investors – whose intention to hold credit could conceivably prove much more fickle."
"King points to the fact that flows into mutual funds may be setting the stage for a veritable maturity mismatch massacre, as investors move from money market funds to long-term funds"
"Investors have seen mutual funds as a substitute for cash, and raises the worrying possibility that they might potentially decide to sell them en masse if risk appetite were to wane or yields on cash were to become more attractive."
"In recent years, the growth in their (Pension, Insurance, long term bond holders) bond holdings has not kept pace with that of mutual funds, households and foreign investors – whose intention to hold credit could conceivably prove much more fickle."
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