Liquidity

Under U.S. Securities and Exchange Commission guidance, at least 85 percent of a mutual fund’s portfolio must be invested in “liquid securities”— assets that can be “sold or disposed of in the ordinary course of business within seven days at approximately the value at which the mutual fund has valued the instrument on its books.” While fund managers monitor and manage portfolio liquidity daily, fund boards oversee liquidity management as part of their oversight of compliance and portfolio management.