Stress levels rising: investment funds and the Covid-19 shock

Extreme market stresses are underscoring central role non-banks play in crisis contagion

In March, the market impact of the Covid-19 pandemic was in full force. Investors were rushing to pull their money out of investment funds worldwide, leading to dramatic outflows – more than $80 billion would be gone from emerging markets (EMs) by the end of the month, with hundreds of billions more pulled from funds in advanced economies. Peak to trough, the S&P 500 fell around 35%, Bloomberg data shows. Median corporate bond spreads in the US widened from 100 basis points to 450bp, researchers

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