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A comprehensive part of the Swedish people’s private savings consists of funds. Investing in funds always includes a risk, why it is of importance that the regulation has an adequate protection for non-professional investors. During the covid-19-pandemic, Nasdaq Stockholm plunged significantly leading to fund savers seeing their savings dwindle and an overwhelming number of investors chose to sell their fund shares. This resulted in an unusually large net outflow being generated from certain types of funds and therefore a lot of fund companies had difficulties managing the liquidity risks in their funds. The Swedish Financial Department has investigated the need for more liquidity management tools and has recently presented a proposal to introduce more tools to the financial market. Different ways to manage liquidity risks on redemption of fund units is called liquidity management tools.

This thesis aims to investigate how fund companies manage liquidity risks through their fund regulations, if there is need to extend the availability of liquidity management tools and if so, what kind of tools should be implemented. I reached the conclusion that there are few options for fund companies to manage liquidity risks besides from different ways to approach liquidity risks through fund strategies and placements. However, I do not see the Financial Department’s proposal as sufficient. I have investigated a number of liquidity management tools, including swing pricing, redemption gates, anti-dilution levies, side pockets, redemption in kind, lowered redemption frequency, notice periods for redemption procedures, and introduction of a harmonized stress test. The main focus was to investigate the tools from a consumer perspective, and my conclusion is that several tools should be introduced to ensure opportunities for fund companies to manage liquidity risks satisfactory.