This case examines the importance of liquidity to financial markets, using the dramatic volatility of mutual fund flows in 2008 as an example. While the case is targeted to MBA students in an investments or portfolio management course, it is also appropriate for an advanced undergraduate course. It is written from the perspective of a fund manager who has experienced significant redemptions in 2008 and is considering whether or not to use ReFlow Management LLC's “liquidity provision” service. The case requires students to examine the nature and magnitude of mutual fund trading costs; how fund flows may induce additional trading, and how ReFlow's innovative service attempts to resolve these issues. Through this analysis, students will better understand what is meant by the term “liquidity” and how liquidity, or a lack thereof, can negatively impact portfolio performance.
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January 20 2017
Liquidity, Mutual Fund Flows, and Reflow Management, LLC Available to Purchase
This case was prepared by Michael Mills (MBA '10) and Richard B. Evans, Assistant Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation.
Online ISSN: 1111-111X
Print ISSN: 1111-111X
Copyright © 2009 by the University of Virginia Darden Foundation, Charlottesville, VA. All rights reserved.
2009
University of Virginia Darden School Foundation
Licensed re-use rights only. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.
Teaching Notes 1–10.
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Liquidity, Mutual Fund Flows, and Reflow Management, LLC
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Evans RB, Mills M (2017;), "Liquidity, Mutual Fund Flows, and Reflow Management, LLC". Teaching Notes, Vol. ahead-of-print No. ahead-of-print.
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