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Do Buy-Side Institutions Supply Liquidity in Bond Markets? Evidence From Mutual Funds – Syracuse University/SMU 

This study presents new evidence on buy-side institutions as a channel of liquidity supply in the corporate bond market

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  • Charlie
    CharlieJuly 21, 2017"Ultimately, it's the buy side that takes views and invests according to those views. When one fund sells something, another fund has to take the ther side. And the more a fund tends to take the other side, the better its performance. Investors doing that trade benefit from lower t-costs with dealers, helping the latter clean up their balance sheet, and may even get securities at a discount to "fair value". This is all well and good, economically sound stuff. And in a…"

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Charlie
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Ultimately, it’s the buy side that takes views and invests according to those views. When one fund sells something, another fund has to take the ther side. And the more a fund tends to take the other side, the better its performance. Investors doing that trade benefit from lower t-costs with dealers, helping the latter clean up their balance sheet, and may even get securities at a discount to “fair value”. This is all well and good, economically sound stuff. And in a universe where there’s a little bit of fast, panicky retail money and a lot of steady, long… Read more »
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