Funds are increasingly facing capacity issues due to the effects of shrinking market liquidity and strong inflows, according to ratings agency Fitch Ratings.
The ratings agency has published a report entitled Fund Capacity - Trade Off Between Size and Performance, where it looks at the problems of shrinking market liquidity and fund capacity. Fitch said funds across the industry are facing "growing" capacity constraints due to the "combined effect of reduced overall market liquidity, growth of a fund's AUM relative to supply, fund flow concentration and search for return reaching into less liquid asset classes". The report said the issue is becoming "particularly pressing" for credit funds, which have been suffering issues with shrinking ...
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