Are mutual funds really ‘burning’ cash?

dara

Someone posted some misleading data before.

This article tells the true story

http://blogs.marketwatch.com/fun ... -cash/?mod=yahoo_hs

ranchgirl

xnz

thanks

Diffusion

busywind

xiexie

mengtt

weigoodone01

rdonly

Here is my reason, why it is a concern.

Think MF as a bank, where cash is the reserve and equity is the business.
To maintain the business flowing (stock transaction), you will need a fine level of reserve ratio. So, if the stock price is high, but your cash reserve is not moving along (lack of cash inflows). You cannot maintain it for long. Buyer side will face increasing pressure from the reserve.

Low cash percentage is still fine if trade volume is low like these days, but if for any reason, volume has to increase, MF will not be able to hold their grounds.

Now, FED is drainning liquidity. Institutions are running dry on reserve ratio, if price doesn't fall.

sooners

回复 1# dara


    thanks