AIMA publishes paper on liquidity risk management in alternative funds

Published: 23 March 2021

AIMA has published a paper on liquidity risk management (LRM) in alternative funds which primarily examines LRM in relation to alternative investment funds and private funds as these are the predominant types of funds managed by AIMA members. The paper explores how the requirements for LRM differ as between professional investor funds and retail-focused funds such as UCITS and investment companies registered under the Investment Company Act of 1940. LRM of investment funds has attracted growing regulatory attention in recent years with many policymakers assessing whether current LRM requirements and practices are still fit for purpose and whether changes are needed. The paper reflects on the concerns being raised in the policy debate, but also looks closely as to how investment managers view LRM for the funds they manage, what the key practices for sound practices in LRM are and what types of policy responses might be more or less helpful to enhancing their ability to perform robust LRM with respect to the funds they manage. The paper has been drafted with support and input from AIMA members and takes into account the market events that followed the global COVID-19 outbreak.

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