How can managers tackle bond liquidity dilemma?

Portfolio managers may well spend considerable time carrying out due diligence on a bond that represents relative value but when liquidity is light the ability to trade becomes constrained and may force the portfolio manager to stay with a position they may otherwise have exited, or be frustrated wi...

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Bibliographic Details
Published inInvestment Week p. 3
Main Author Kirk, Gary
Format Trade Publication Article
LanguageEnglish
Published London Incisive Media Limited 06.08.2012
Subjects
Bonds
Government bonds
Inventory
Investment advisors
Liquidity
Portfolio management
United Kingdom > UK
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Summary:Portfolio managers may well spend considerable time carrying out due diligence on a bond that represents relative value but when liquidity is light the ability to trade becomes constrained and may force the portfolio manager to stay with a position they may otherwise have exited, or be frustrated with cash in a rising market unable to source the desired position. This invariably forces the fund manager to supplement the lack of yield by venturing into areas they may not otherwise have participated in.