You are using an outdated browser. Please upgrade your browser to improve your experience.

Our views 02 September 2020

High yield liquidity: in at the deep end

By Stephen Tapley, CFA , Senior Fund Manager

5 min read

In a 2015 memo, Howard Marks, of Oaktree Capital, defined liquidity as ‘the degree to which an asset or security can be bought or sold in the market without affecting the asset’s price’.

He explained that it is not a fixed attribute, but instead ‘entirely situational’, and that it is a function of size and the direction of the market at that specific time.

These elements make liquidity difficult to forecast. Since he specific nature of the future ‘situation’ is not yet known, there will not always be a reliable availability of liquidity. Nevertheless, despite the challenges of applying it, the definition provides useful insights when assessing the availability of high yield liquidity.

Read High yield liquidity: in at the deep end full article