Business Management

  • Business Management

    How Mutual Funds Manage Liquidity Risk

    In the dynamic world of finance, mutual funds play a pivotal role in helping investors achieve their financial goals. However, one of the critical challenges these funds face is liquidity risk. Effectively managing liquidity risk is essential to ensure that mutual funds can meet redemption requests without significantly impacting their portfolio or the value of their assets. In this comprehensive article, we delve into the various strategies and mechanisms mutual funds employ to manage liquidity risk. Understanding Liquidity Risk in Mutual Funds Liquidity risk refers to the potential difficulty a mutual fund may encounter when trying to sell assets quickly without incurring significant losses. This risk becomes particularly pronounced during…