Third Avenue's Now-Frozen Fund Called Liquidity Fears a ‘Myth’
- Manager, in 2012, played up fund's small size and cash cushion
- Fund liquidating amid troubles in high-yield debt market
How Will Markets React to the Third Avenue Freeze?
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Third Avenue Management LLC rattled credit markets this week when it said that a lack of liquidity had forced it to halt redemptions in its junk-bond mutual fund. Not so long ago, the fund was telling investors that concerns about illiquidity in these markets were a “myth.”
The firm’s Third Avenue Focused Credit Fund, with investments in high-yield debt and bank loans, keeps excess cash on hand, lead manager Thomas Lapointe wrote in a 2012 investor commentary reviewed by Bloomberg News. The fund would also remain small enough -- with assets under $3 billion -- to stay nimble in building and liquidating positions, he wrote.