M&G ‘s warning on bond fund liquidity set off a bush fire in social media on the 30th and 31st July.  Not surprisingly, main stream news articles enjoyed high engagement from readers comments, and social media (in particular) twitter sent the news wide and far.

“Investors are being warned off Britain’s biggest and most successful corporate bond funds amid fears that liquidity in the sector could dry up, causing a drag on performance and locking investors into poorly performing funds.

Last week, M & G, the pioneer of bond funds and manager of the top-performing £6.2bn Corporate Bond fund and £5.1bn Strategic Corporate Bond fund, held a telephone conference call with influential financial advisers urging them not to put any more of their clients’ money its way.

M & G is also understood to have turned down £1bn worth of business for institutional corporate bond funds.

The move to stem inflows into the funds came just days after the Financial Services Authority wrote to corporate bond fund managers asking for a review of liquidity in the sector and whether the situation could result in investors being denied access to their money. “Liquidity risk” is the danger that when you need to sell a bond, you won’t be able to.”

Source: The Telegraph.  Read full article here.