Redemption Suspension
A provision on a hedge fund preventing the withdrawal from the fund during a redemption period. Depending on the terms of the hedge fund, which can be found in its prospectus, a manager generally has the ability to implement this at anytime. The redemption suspension is implemented when the fund is unable to meet redemption demands. Investopedia Says:
This action is seen as a very negative event for a hedge fund and is used only in extreme situations, as it is preventing investors to access their money. It is also seen as a sign of a major problem within the fund and its management, and will often lead to a run on the fund once the redemption suspension is lifted. Related Terms:
Aggressive Investment Strategy
Gate Provision
Hedge Fund
Liquidity Risk
Redemption
Redemption Fee |