Risk Management by U.S. Mutual Funds Facing European Sovereign Debt Risk

more+
less-

In the face of a potential sovereign debt crisis in one or more European countries, management and boards of registered investment companies (hereinafter “mutual funds” or “funds”) should consider a variety of potential hazards as part of an effective risk management program. The most obvious risks arise from direct investment exposure to the sovereign debt of Greece and the other potentially risky sovereign issuers in the European Monetary Union (“eurozone”). However, other material risks exist that may be harder to detect and quantify. These risks include indirect investment exposure (e.g., banks that have exposure to sovereign debt) as well as liquidity and valuation risks, operational risks and risks from derivatives and other contracts in the aftermath of a default, redenomination or other deleterious event. In addition, it is critically important that the fund’s disclosure documents adequately identify and explain any applicable material risks. This DechertOnPoint will highlight certain key considerations for mutual funds, particularly non-money market funds, as they navigate these events.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: General Business Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »