Redemption in Kind and Mutual Fund Liquidity Management

• 成果类型: Article
• 署名作者: Agarwal, Vikas; Ren, Honglin; Shen, Ke; Zhao, Haibei
• 署名单位: University System of Georgia; Georgia State University; Renmin University of China; Lehigh University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac080
• 发表日期: 2023
• 页码: 2274
• 关键词: INVESTOR FLOWS; fragility; returns; performance; prices; taxes; COSTS; RISK

摘要

Open-end mutual funds can use redemption in kind to satisfy investor redemptions by delivering securities instead of cash. We find that funds that reserve their rights to redeem in kind experience less redemption after poor performance. Evidence from actual in-kind transactions reveals several unique mechanisms for redemption in kind to mitigate fund runs, including the delivery of more illiquid stocks and stocks with greater tax overhang. Funds suffer less from the adverse impact of outflows on their performance. However, redeeming investors bear significant liquidation costs when they sell securities, costs associated with destabilization in the prices of these securities.