Bank of England warns some investment funds may prove illiquid in times of market stress

LONDON, July 17 Thu Jul 17, 2014 7:09am EDT

LONDON, July 17 (Reuters) - Investment funds focused on emerging economies or high-yield debt may be unable to return investors' money promptly if turmoil hits markets, potentially causing major disruption, a top Bank of England official warned on Thursday.

Many investment funds promise to redeem investors' shares within a day or two. But BoE Deputy Governor Jon Cunliffe said this may not be realistic when trouble strikes less liquid markets and droves of investors want to cut their losses.

"Market participants and investors will not always be able to sell what they want, where they want, and when they want," Cunliffe told a conference hosted by the Financial Reporting Council, a body that promotes corporate governance standard. (Reporting by David Milliken Editing by Jeremy Gaunt)