Open-ended mutual funds may be able to mitigate some of the risk of investor runs by making use of swing pricing, a working paper published by the Bank for International Settlements finds.
Authors Ulf Lewrick and Jochen Schanz designed a model whereby investors can choose to invest directly in assets or buy shares in a fund. The market is populated by a large number of small funds, which commit to a pricing structure and then work to maximise utility for their investors.
The authors find swing
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