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Asset managers are the new "Masters of the Universe".Small and medium-sized businesses, housing associations and private equity groups have increasingly turned to asset management groups to help them raise capital and expand, as banks have retreated from the markets. The bank says this happens when liquidity, a gauge of how easy (or not) it is to trade in a market, seems to be ample in normal times, but vanishes quickly during market stress.The BIS report says central banks' asset purchase programs have reduced liquidity and reinforced liquidity illusion in certain bond markets.This is particularly worrying as, since 2009, more than 60 per cent of the $3tn of investor inflows into bond funds, which now have total net assets of $7.4tn, went into relatively illiquid corporate bonds, while inflows into liquid markets such as US Treasuries remained small.
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