Ch.11 · Comparing Fund Performance · hard
How does a sudden increase in AUM of a liquid fund affect the fund manager's portfolio management?
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EXPLANATION
Liquid funds hold short-term, high-quality money market instruments. A sudden AUM increase (e.g., institutional inflows) means more capital to deploy across a wider universe of instruments, diluting concentration risk. The short duration of instruments also limits the impact of any single credit event.
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