Foreign open-end funds threaten financial stability – BoJ study
Researchers say external crises could lead to large outflows from vehicles investing in Japan
Bank of Japan researchers say the structural vulnerabilities of open-end funds mean the vehicles pose downside risks to domestic asset prices when external economic shocks occur.
In a working paper published on July 11, Kenta Yamamoto, Tomohiro Okubo, Nobuhiro Abe and Yukio Minoura examine the effect on asset prices in Japan’s financial markets as foreign open-end fund managers respond to investors’ requests to unwind positions.
The authors say the funds account for around 10% of Japan’s equities
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