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Corporate Bond Funds + Llliquidity = Risk

TedTed
edited May 2015 in The Bullpen
FYI: Corporate bond fund investors react badly, if intelligently, to losing money which may mean some bond funds run into and also cause trouble when a selloff in illiquid markets starts.

Given two trends – one towards lower bond market liquidity and and other of surging investment in corporate bond funds – this could end up being a big story.
Regards,
Ted
http://blogs.reuters.com/james-saft/2015/05/20/corporate-bond-funds-illiquidity-risk/

M* Corporate Bond Fund Returns: http://news.morningstar.com/fund-category-returns/corporate-bond/$FOCA$TW.aspx

The Study:
http://finance.wharton.upenn.edu/~itayg/Files/bondfunds.pdf
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