John Hancock Investments has announced that it is using a stress-testing tool to help assess the liquidity of securities held in its mutual fund portfolios.
The technology of the tool, LiquidityMetrics from MSCI, will allow the firm to stress test the liquidity of its funds, measure the potential impact of various market scenarios and evaluate potential transaction costs, liquidation time horizons, amounts available for liquidation, and other critical information.
In the wake of the financial crisis, the need for mutual funds to hold sufficient cash on hand in case of high redemptions became a priority.
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