Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Junk Bond Managers Battle Fallout From Third Avenue Fund Blowup
Third Avenue's decision this week to block redemptions and liquidate a fund with $789 million in assets jolted Wall Street and caught the attention of the U.S. Securities and Exchange Commission.
Thanks for the link Ted. Junk bonds have a reputation for being highly illiquid. So I'm not surprised. I'll submit that when things are going well they are more often referred to as high yield bonds (or funds). But when things aren't going well, they're more likely to be called junk .
Price closed PRHYX to new investors about 5 years ago. In the past that always seemed to me a pretty good bell-weather of where the high yield market was heading. This time around, however, they proved way too early in the closing - assuming it was based on valuation and froth in the HY markets. (Of course, managers rarely speak that bluntly when closing a fund.)
Not to be alarmist, but the blocking of redemptions by Third Avenue is the type of thing that often leads to panic in other markets as well. Umm ... let's hope it's different this time. But Friday did resemble a bit of a train wreck across many markets.
Comments
Thanks for the link Ted. Junk bonds have a reputation for being highly illiquid. So I'm not surprised. I'll submit that when things are going well they are more often referred to as high yield bonds (or funds). But when things aren't going well, they're more likely to be called junk .
Price closed PRHYX to new investors about 5 years ago. In the past that always seemed to me a pretty good bell-weather of where the high yield market was heading. This time around, however, they proved way too early in the closing - assuming it was based on valuation and froth in the HY markets. (Of course, managers rarely speak that bluntly when closing a fund.)
Not to be alarmist, but the blocking of redemptions by Third Avenue is the type of thing that often leads to panic in other markets as well. Umm ... let's hope it's different this time. But Friday did resemble a bit of a train wreck across many markets.
Regards