A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider
October 28, 2016 \
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Full Article: Business Insider
The top five investment companies hold $264 billion in US high-yield bonds, according to a big report from Stephen Caprio and Matthew Mish at UBS. That’s equivalent to 20% of the market. The top 20 hold $605 billion, equivalent to 46%
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6 Comments on "A Handful of Giant Investors Have the Fate of the Bond Market in Their Hands – Business Insider"
The bond ownership distribution is already a significant problem now. Forgetting market conventions and norms, materially large funds will receive better pricing of trades – disadvantaging the smaller funds’ investors – provide market liquidity risk and hold sway over market development.
1. Better pricing leads us all to increased regulation and therefore ironically costs for all investors and greater barriers of entry.
2. Liquidity risk is a self-fulfilling black hole and merely a question of when.
3. Any market development changes will be in the oligopoly’s interests – a further detriment to market behavior.
I am continually hearing anecdotes of how the big funds are being allocated egregious shares of new issue deals which exacerbates this inequity. The market should now be considering the “too big to fail” theory as it relates to the buy-side it seems.
Agreed Slider. It was quite interesting how Blackrock enjoyed the asset growth banquet, but in 2014 began to voice their opinion on liquidity
Then the SEC began to consider the concept of regulating the buy side as significantly important finanancial institutions, and the message has become.
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