T. Rowe's High Yield Fund has 3 percent in cash, up from 1 percent a year ago, said Mark Vaselkiv, manager of the fund.  Instead of cash, Natixis has built up a reserve of as much as 20 percent in some of its mutual funds in higher quality, non-U.S. securities, such as bonds denominated in Australian and Canadian dollars, said David Lafferty, chief market strategist at Natixis. As of September 30, Natixis had $894.3 billion in assets under management and its subsidiary, Boston-based Loomis Sayles & Co., had $223.2 billion.  Read MoreNo recession in 2015, but no growth either: BofA  Firms, like New York-based Voya Investment Management, which uses third party managers to subadvise its funds, now give high-yield bond managers up to three days notice before it makes big redemptions out of those funds to make sure they can get the money in an orderly and timely fashion, said Paul Zemsky, CIO of multi-asset strategies at Voya, speaking on Tuesday at the Reuters Global Investment Outlook Summit in New York.  One particular area of concern regarding liquidity is in bank loan funds, which typically invest in loans made to non-investment-grade companies, because these loans can take weeks to settle. To address this, T. Rowe, like many firms, has a line of credit that it can use in the event of a liquidity crunch. Over the past year, the firm has doubled its line of credit to $300 million, Vaselkiv said.  Concerns about bond liquidity have made it up to the fund board level at companies, George Walker, chief executive officer of New York-based Neuberger Berman, told attendees of the Securities Industry and Financial Markets Association's annual conference in New York on Oct 10.
U.S. funds are making sure they don't get stuck holding hard-to-sell bonds if fixed income markets see a race to the exits when rates start to rise.