Download or read book Swing Pricing and Fragility in Open end Mutual Funds written by Dunhong Jin and published by International Monetary Fund. This book was released on 2019-11-01 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: How to prevent runs on open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing pricing) adjust funds’ net asset values to pass on funds’ trading costs to transacting shareholders. Using unique data on investor transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces redemptions during stress periods. The positive impact of alternative pricing rules on fund flows reverses in calm periods when costs associated with higher tracking error dominate the pricing effect.
Download or read book The New Finance written by Franklin R. Edwards and published by American Enterprise Institute. This book was released on 1996 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dramatic changes in information and telecommunications technologies have transformed U.S. financial markets in the 1980s and 1990s. This book examines the growth of mutual funds and derivatives markets and the decline of banks and explores implications of those developments for financial stability and regulatory policy. One of the book's central conclusions is that the current system of bank regulation is out of step with today's financial realities and needs to be substantially changed. Franklin Edwards asserts that the best way to increase the freedom of financial institutions to compete while making the financial system less vulnerable to excessive risk-taking by individual financial institutions is to adopt a system of collateralized banking. He shows how adopting such a system will result in a more stable financial system, both by reducing our reliance on government to maintain financial soundness and by enhancing the effectiveness of private markets in controlling institutional risk taking.
Download or read book The Behavior of Fixed income Funds during COVID 19 Market Turmoil written by Mr.Frank Hespeler and published by International Monetary Fund. This book was released on 2020-12-14 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note analyzes the stress experienced (and caused) by open-end mutual funds during the March COVID-19 stress episode, with a focus on global fixed-income funds. In light of increased valuation uncertainty, funds experienced a short period of intense withdrawals while the market liquidity of their holdings deteriorated substantially. To cover redemptions, afflicted funds predominantly shed liquid assets first—for example, cash, cash equivalents, and US Treasury securities. But forced asset sales amplified price pressures in markets and contributed to liquidity falling across fixed-income markets. This drop in market liquidity, as well as the general stress in financial markets, may have led to fund investors becoming even more sensitive to challenging portfolio performance and encouraged further withdrawals. Only after central banks intervened, directly and indirectly supporting asset managers, did liquidity and redemption stress subside. Overall, the March episode validated the financial-stability concerns about liquidity vulnerabilities in the fund industry and calls for further action to address them.
Download or read book Advances in Behavioral Finance written by Richard H. Thaler and published by Russell Sage Foundation. This book was released on 1993-08-19 with total page 628 pages. Available in PDF, EPUB and Kindle. Book excerpt: Modern financial markets offer the real world's best approximation to the idealized price auction market envisioned in economic theory. Nevertheless, as the increasingly exquisite and detailed financial data demonstrate, financial markets often fail to behave as they should if trading were truly dominated by the fully rational investors that populate financial theories. These markets anomalies have spawned a new approach to finance, one which as editor Richard Thaler puts it, "entertains the possibility that some agents in the economy behave less than fully rationally some of the time." Advances in Behavioral Finance collects together twenty-one recent articles that illustrate the power of this approach. These papers demonstrate how specific departures from fully rational decision making by individual market agents can provide explanations of otherwise puzzling market phenomena. To take several examples, Werner De Bondt and Thaler find an explanation for superior price performance of firms with poor recent earnings histories in the tendencies of investors to overreact to recent information. Richard Roll traces the negative effects of corporate takeovers on the stock prices of the acquiring firms to the overconfidence of managers, who fail to recognize the contributions of chance to their past successes. Andrei Shleifer and Robert Vishny show how the difficulty of establishing a reliable reputation for correctly assessing the value of long term capital projects can lead investment analysis, and hence corporate managers, to focus myopically on short term returns. As a testing ground for assessing the empirical accuracy of behavioral theories, the successful studies in this landmark collection reach beyond the world of finance to suggest, very powerfully, the importance of pursuing behavioral approaches to other areas of economic life. Advances in Behavioral Finance is a solid beachhead for behavioral work in the financial arena and a clear promise of wider application for behavioral economics in the future.
Download or read book ETFs and Systemic Risks written by Ayan Bhattacharya and published by CFA Institute Research Foundation. This book was released on 2020-01-22 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Exchange-traded funds (ETFs) revolutionized asset markets by using an innovative structure to make investing in a wide variety of asset classes simpler and cheaper. With their growing importance has come increasing concern that these products pose new risks to market stability and performance. This paper examines whether ETFs affect systemic risks in financial markets and, if they do, what the mechanism is by which this impact occurs and what can be done to keep the risks under control. We review current research and empirical evidence on these issues and discuss some emerging risks in ETFs. We ask whether we have the right “rules of the road” to deal with the new drivers of market behavior.
Download or read book Guide to Investing in Stocks Bonds Etfs and Mutual Funds written by Shyam Bahadur Ph.D. and published by LifeRich Publishing. This book was released on 2018-02-13 with total page 171 pages. Available in PDF, EPUB and Kindle. Book excerpt: Where to invest for growth can be a daunting decision for even an experienced investor. For a beginner, it can seem downright impossible. The author covers in this investment guide all kinds of investments including the stocks, treasury securities, municipal and corporate bonds, mutual funds and exchange traded funds and introduces even the master limited partnerships and real estate investment trusts. Some of the highlights of coverage are the concept of compounding and dollar cost averaging selection and analysis of stocks using the fundamental approach to stock evaluation supplemented with technical analysis selection and analysis of mutual funds and ETFs asset allocation, diversification and rebalancing guidelines for buying and selling the securities evaluating market levels and the discussion of market volatility and crash economic and tax considerations in investing
Download or read book On Swing Pricing and Systemic Risk Mitigation written by Sheheryar Malik and published by International Monetary Fund. This book was released on 2017-07-18 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Swing pricing allows a fund manager to transfer to redeeming or subscribing investors the costs associated with their trading activity, thus potentially discouraging large flows. This liquidity management tool, which is already used in major jurisdictions, may also help mitigate systemic risk. Here we develop and apply a methodology to investigate whether swing pricing does in fact help dampen flows out of funds, especially during periods of market stress. Drawing on evidence of first-mover advantage within a group of ‘swinging’ corporate bond funds, we provide policy considerations for enhancing the tool’s effectiveness as a systemic risk mitigant.
Download or read book Guidance Note For Developing Government Local Currency Bond Markets written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-03-12 with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt: This guidance note was prepared by International Monetary Fund (IMF) and World Bank Group staff under a project undertaken with the support of grants from the Financial Sector Reform and Strengthening Initiative, (FIRST).The aim of the project was to deliver a report that provides emerging market and developing economies with guidance and a roadmap in developing their local currency bond markets (LCBMs). This note will also inform technical assistance missions in advising authorities on the formulation of policies to deepen LCBMs.
Download or read book Slow Moving Capital written by Mark Mitchell and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study three cases in which specialized arbitrageurs lost significant amounts of capital and, as a result, became liquidity demanders rather than providers. The effects on security markets were large and persistent: Prices dropped relative to fundamentals and the rebound took months. While multi-strategy hedge funds who were not capital constrained increased their positions, a large fraction of these funds actually acted as net sellers consistent with the view that information barriers within a firm (not just relative to outside investors) can lead to capital constraints for trading desks with mark-to-market losses. Our findings suggest that real world frictions impede arbitrage capital.
Download or read book Triumph of the Optimists written by Elroy Dimson and published by Princeton University Press. This book was released on 2002-02-03 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investors have too often extrapolated from recent experience. In the 1950s, who but the most rampant optimist would have dreamt that over the next fifty years the real return on equities would be 9% per year? Yet this is what happened in the U.S. stock market. The optimists triumphed. However, as Don Marquis observed, an optimist is someone who never had much experience. The authors of this book extend our experience across regions and across time. They present a comprehensive and consistent analysis of investment returns for equities, bonds, bills, currencies and inflation, spanning sixteen countries, from the end of the nineteenth century to the beginning of the twenty-first. This is achieved in a clear and simple way, with over 130 color diagrams that make comparison easy. Crucially, the authors analyze total returns, including reinvested income. They show that some historical indexes overstate long-term performance because they are contaminated by survivorship bias and that long-term stock returns are in most countries seriously overestimated, due to a focus on periods that with hindsight are known to have been successful. The book also provides the first comprehensive evidence on the long-term equity risk premium--the reward for bearing the risk of common stocks. The authors reveal whether the United States and United Kingdom have had unusually high stock market returns compared to other countries. The book covers the U.S., the U.K., Japan, France, Germany, Canada, Italy, Spain, Switzerland, Australia, the Netherlands, Sweden, Belgium, Ireland, Denmark, and South Africa. Triumph of the Optimists is required reading for investment professionals, financial economists, and investors. It will be the definitive reference in the field and consulted for years to come.
Download or read book Banks and Capital Requirements written by Benjamin H. Cohen and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Financial Stability Monitoring written by Tobias Adrian and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a recently released New York Fed staff report, we present a forward-looking monitoring program to identify and track time-varying sources of systemic risk.
Download or read book Stock Market Policy Since the 1987 Crash written by Hans R. Stoll and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 143 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the US stock market crashed on October 19, 1987, many studies have been conducted to learn from this experience in the hopes of avoiding a similarly adverse future fall. The book, originally published as a special issue of the Journal of Financial Services Research, considers some of the important policy adjustments that have been implemented in the wake of the 1987 crash. Taken separately and together, these five papers offer a synthesis and summary of the most important policy innovations that have evolved since the largest single-day decline in stock market history.
Download or read book Mutual Funds written by Seth Anderson and published by Springer Science & Business Media. This book was released on 2006-03-30 with total page 169 pages. Available in PDF, EPUB and Kindle. Book excerpt: Mutual funds are the dominant form of investment companies in the United States today, with approximately $7 trillion in assets under management. Over the past half century an important body of academic research has addressed various issues about the nature of these companies. These works focus on a wide range of topics, including fund performance, investment style, and expense issues, among others. MUTUAL FUNDS: Fifty Years of Research Findings is designed for the academic researcher interested in the various issues surrounding mutual funds and for the practitioner interested in funds for investment purposes. The authors briefly trace the historical evolution of funds, present important aspects of the Investment Company Act of 1940, and then summarize a substantial portion of the academic literature which has been written over the past five decades. "This book presents an outstanding wealth of information on mutual funds in a remarkably readable format. It is probably the most comprehensive work currently available on funds. The book sheds light on the numerous issues surrounding mutual fund performance and pricing and is an important resource for any serious investor." Kathleen A. Wayner, Bowling Portfolio Management, President and CEO
Download or read book Securities Market Issues for the 21st Century written by Merritt B. Fox and published by . This book was released on 2018 with total page 476 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Why the Bubble Burst written by Lawrance Lee Evans and published by Edward Elgar Publishing. This book was released on 2003-01-01 with total page 262 pages. Available in PDF, EPUB and Kindle. Book excerpt: Providing a comprehensive look at the most dramatic run-up in equity values in US history, this volume takes the reader from theory to empirics, illustrating why we need to go beyond the efficient markets hypothesis and the theory of domestic irrational exuberance to fully unpack the unprecedented phenomenon, why the market was destined for a major decline and why the fallout will be severe and protracted.
Download or read book Oversight of the Mutual Fund Industry written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets and Government Sponsored Enterprises and published by . This book was released on 2011 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt:
