Liquidity concerns are on the rise and show no sign of abating. But fixed income investors shouldn’t have to give up on alpha in order to maintain good liquidity – careful management can result in a happy medium, in my view.
After a summer flurry of liquidity shocks, investors have rightly pushed the topic to the top of their agenda and are turning a critical eye on portfolio construction, questioning just what their managers are holding.
And this is a good question to ask – investors should know what they own.
While liquidity management remains the job of the trusted asset manager, it is important that, besides being comfortable with how their investments’ liquidity risk is being managed, they enjoy an adequate level of transparency into their investments: Information is power!