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Natural Liquidity
Definition
An large, ready and active pool of investors that have knowledge of and have an interest in buying and selling a security.
Using the term Natural Liquidity :
The large cap mutual fund manager only trades stocks that have natural liquidity in order to allow for free movement within the portfolio.
Pay Special Attention To :
Even with natural liquidity present, large fund managers must be aware of not overly concentrating in a particular security. If one security makes up too much of a portfolio, then the pricing will be effected adversely by the manager himself when he seeks to exit.
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Related terms
trading, markets
