Open-ended mutual funds may destabilise markets, says IMF paper

IMF HQ 2
IMF headquarters
Photo: Henrik Gschwindt de Gyor/IMF

Open-ended investment funds “can spark volatility and magnify the impact of shocks”, says an International Monetary Fund paper.

The paper by Fabio Natalucci, Mahvash Qureshi, and Felix Suntheim, all of whom are IMF officials, looks at mutual funds that may hold illiquid assets but issue and sell shares daily.

They hold around a fifth of total global non-bank assets, say the authors. The paper says illiquid open-ended funds “have a major potential vulnerability”. Investors can cash out of their

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