Liquidity continues to be an ongoing concern for fixed income participants and market regulators globally. Recent high profile failures of funds run by Third Avenue Management, Stone Lion Capital Partners and Lucidus Capital Partners sparked somewhat of a panic, at least in credit markets. The main cause of these failures was that the funds offered a level of liquidity that was inappropriate for the often highly illiquid, distressed assets that they were buying. In our view, it is time to reassess market attitudes towards liquidity. As an industry, and more broadly as investors, we need to better acknowledge that liquidity is not instantaneous, free and continuously available. Instead, we may have to start moving towards a model where investment horizons and liquidity expectations are more appropriately matched to the asset classes being invested in. (VIEW LINK)