Asset managers are only just beginning to take action to replace LIBOR-linked benchmarks on their fund products after repeated warnings from regulators and market participants about the risk posed by continued exposure to the crisis-hit rate, which will cease to exist in 2021. The London Interbank Offered Rate (LIBOR) is currently the world's most widely-used reference rate, providing a benchmark for about $350trn worth of financial products, according to legal firm Ashurst....
The client - side has been slow to switch from LIBOR - linked benchmarks on fund products , according to Investment Week , citing the Investment Association ’s ( IA ) February survey that found 90 % of participating managers use LIBOR as a benchmark for at least one fund . Of the IA 's universe of funds use a LIBOR - linked benchmark and just three – all L London products – L SONIA , according to FE data . Managers continue to launch LIBOR - linked funds , as recently as July , Pictet Capital Management launched its TR - Sirius fund with a LIBOR - linked hurdle rate . Church House Investment Management , which was reportedly making good progress selling all LIBOR - linked securities it invests in late last year , still uses LIBOR as the benchmark for its Tenax Absolute Return Strategies fund . The firm is contemplating applying a spread when making the switch and said it is in no rush given the regulatory and regulatory implications .