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Meeting recently in Madrid the IAB, which is sponsored by the Spanish funds' platform Banco Inversis, said that the reason why such issues kept arising was because there was often a mismatch between the liquidity of investment classes not matching the liquidity of the underlying assets.

The Group felt that regulatory attempts to try to balance the competing demands of investors with the objectives laid down by the fund manager was increasingly difficult as accelerating early redemptions could alter the dynamic of the fund and challenge its original purpose.

It was suggested that while attempts to bolster risk management across all facets of fund management might be seeking to meet investor concerns - particularly in the retail market - the real test of any perceived failure would come down to a judgement of the reasonableness of the manager's risk management actions at a point in time.

IAB member and Investment Management head at London based Cass business school Prof Andrew Clare, said, that appreciating the opportunities and risks relating to liquidity across all asset classes, was often a question of investor education:

"Appreciating the opportunities and risks relating to liquidity in the various asset classes is a question of investor education. For example, in the case of property, most people know that they can't wake up in the morning and decide to sell their house by 12 o'clock the same day. But investors expect to have daily liquidity in their property portfolio, that is, the option to complete commercial property transactions in a day! To have daily liquidity in property funds is just nonsensical. Of all the asset classes, it's probably the biggest mismatch between product and underlying asset there is. In my view the industry needs to bite the bullet and explain to investors when they can't have daily liquidity, particularly in property funds."

The IAB agreed that there was no simple 'tick box' approach to liquidity management, for even if managers designed a product that had a longer liquidity window then it was likely that it would not be commercially viable across the whole marketplace.