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Redemption Risk of Bond Mutual Funds and Dealer Positioning


  • Tobias Adrian
  • Michael J. Fleming
  • Or Shachar
  • Erik Vogt


Market participants have recently voiced concerns that bond markets seem to become illiquid precisely when they want to sell bonds. Some possible reasons for a decline in corporate bond market liquidity in times of stress include the increasing share of corporate bond ownership by mutual funds and the reduced share of corporate bond ownership by dealers. In this post, we examine the potential effects of outflows from bond mutual funds and the role of dealers? positioning in corporate bonds.

Suggested Citation

  • Tobias Adrian & Michael J. Fleming & Or Shachar & Erik Vogt, 2015. "Redemption Risk of Bond Mutual Funds and Dealer Positioning," Liberty Street Economics 20151008, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87070

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    Cited by:

    1. Anna Paulson & Richard Rosen, 2016. "The Life Insurance Industry and Systemic Risk: A Bond Market Perspective," Annual Review of Financial Economics, Annual Reviews, vol. 8(1), pages 155-174, October.
    2. Nicola Branzoli & Giovanni Guazzarotti, 2017. "Liquidity transformation and financial stability: evidence from the cash management of open-end Italian mutual funds," Temi di discussione (Economic working papers) 1113, Bank of Italy, Economic Research and International Relations Area.

    More about this item


    liquidity; dealers; mutual funds;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services


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