Lock Up Period Definition

Below please find a definition of “Lock Up Period”

Financial Analysis Training & Glossary TermsLock Up Period: The period of time — often one year — during which hedge-fund investors are initially prohibited from redeeming their shares.

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Hedge Fund Liquidity

There is a near-constant debate that takes place between hedge fund managers and investors over liquidity and lock-up periods.  In this video, I explain hedge fund liquidity and lock-up periods and what these things mean to hedge funds and hedge fund investors.

Video Transcript/SummaryThe strategies and tips provided within this video module include:

  1. Liquidity is often something taken into consideration by investors that invest in hedge funds.
  2. With some hedge funds, you have monthly liquidity and you put in a redemption request that will be filled by the end of the month.  
  3. Other hedge funds have long lock-up periods because they invest in assets with longer investment horizons.
  4. The average lock-up period for a hedge fund is 18 months.  
  5. A lock-up period could be very strict or the fund might simply charge a fee for withdrawing your money earlier than the agreed-upon time.  
  6. Institutional investors may be better suited for these longer-term investments.

Transcript for Hedge Fund Liquidity
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