We contend that the confluence of portfolio similarity and correlated liquidity shocks within mutual fund styles can exacerbate fund exposure to liquidity risk. We find that mutual funds mitigate such liquidity risk exposure by systematically reducing portfolio overlap with peer funds when their...

We contend that confluence of portfolio overlap and correlated liquidity shocks within mutual fund styles can exacerbate fund exposure to flow-driven liquidity risk. We show that funds mitigate such liquidity risk by reducing portfolio overlap with peer funds when their flows become more...

The melding of portfolio overlap and correlated liquidity shocks among mutual funds with similar styles exposes funds to fire-sale risk. We examine the extent to which funds mitigate this liquidity risk by measuring their abnormal selling of holdings that are commonly held by category-peer funds...