This case examines the importance of liquidity to the financial markets, with the dramatic volatility of fund flows in 2008 as an example. While the case of MBA students aligned in one or portfolio management course, it is also appropriate for an advanced undergraduate course. It is from the perspective of a fund manager that has experienced substantial redemptions, written in 2008 and is considering whether reflow Management LLC, use the “liquidity provision” service. Th … Read more »

This case examines the importance of liquidity to the financial markets, with the dramatic volatility of fund flows in 2008 as an example. While the case of MBA students aligned in one or portfolio management course, it is also appropriate for an advanced undergraduate course. It is from the perspective of a fund manager that has experienced substantial redemptions, written in 2008 and is considering whether reflow Management LLC, use the “liquidity provision” service. The case requires students to the nature and extent of the mutual fund trading costs can examine how fund flows induce additional trade and reflow how innovative service will attempt to resolve these issues. Through this analysis, students will better understand what is meant by the term “liquidity” and how liquidity, or a lack thereof, can have a negative impact on the performance of the portfolio.
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Richard B. Evans,
Michael Mills
Source: Darden School of Business
12 pages.
Publication Date: Aug 24, 2009. Prod #: UV2560-PDF-ENG
Liquidity, Mutual fund flows and reflow Management, LLC HBR case solution

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