Liquidity Management Strategies in Fixed Income Portfolios

In the context of fixed income portfolio management, liquidity management is a critical aspect of maintaining portfolio stability and ensuring that investor obligations are met. Consider the following scenario:

You are the portfolio manager for a pension fund that holds a diversified portfolio of fixed income securities, including government bonds, corporate bonds, and mortgage-backed securities. Recently, the fund has experienced significant outflows due to rising interest rates and increased volatility in the equity markets. As a result, you are tasked with evaluating the liquidity profile of the portfolio and proposing strategies to enhance liquidity without compromising the overall return objectives.

Discuss the key components of liquidity management in fixed income portfolios, identify potential risks stemming from the current portfolio's liquidity position, and propose actionable strategies that can be implemented to mitigate these risks while aligning with the fund’s investment policy statement. Consider the trade-offs between liquidity and yield in your response.