The European Fund and Asset Management Association (EFAMA) has released today a new issue of its Market Insights series titled “Fund redemptions amid periods of shock: evidence from UCITS corporate bond fund outflows”. This report provides a comprehensive analysis of the daily and monthly redemption patterns of European corporate bond funds during the three most recent financial shocks (Covid-19 in 2020, the 2022 interest rate hike, and the tariff shock in 2025), evaluating whether observed redemption levels could pose a material threat to financial stability.
Key findings include:
Hypothesised liquidity mismatches in bond funds did not materialise during the shock periods and fund outflows remain well below the levels used in ESMA stress test scenarios (i.e. 22% within one week).
During the Covid19 shock, most daily flows (expressed as a percentage of the fund’s net assets in the previous month) remained close to zero. Only rarely did funds experience extreme outflows (or inflows).
During the most turbulent Covid periods, only about one in nine corporate bond funds experienced a single day with outflows exceeding 10% of net assets. Such evidence strongly questions the assumptions around widespread systemic outflows in open-ended funds.
During the turbulent period of 2022, outflows exceeding 10% of net assets were extremely rare, occurring in less than 0.3% of all daily observations analysed.
During the 2025 tariff-triggered shock, daily outflows exceeding 10% of net assets were also extremely rare, occurring in less than 0.3% of the sample. Moreover, when shifting the focus from individual daily observations to the fund level, the results remain consistent: only about one in ten funds experienced even a single day with outflows exceeding 10% of net assets.
Federico Cupelli, Deputy Director, Regulatory Policy at EFAMA commented: “This analysis suggests that risk-based supervision is more effective than regulation in addressing potential liquidity mismatches in the fund sector. Instead of applying broad measures across the entire fund universe, it may indeed be more effective to focus regulatory attention on those specific groups of funds that are structurally more exposed to the risk of extreme outflows.”
- ENDS -
For further information, please contact:
Hayley McEwen
Head of Communication & Membership Development
About the Market Insights
EFAMA’s Market Insights series analyses recent industry trends and developments based on the latest available data and presents our findings in the context of current policy perspectives. We publish numerous concise reports each year covering diverse topics such as competitiveness, costs and performance, ETFs, alternative investments, retail investing, ESG fund markets, and more.
