Hedge Funds Investors Lock Up

Cerberus Funds Set Strict Lock Ups for Investors

Cerberus is launching two new hedge funds and these funds may bar investors from withdrawing their money for at least 3 years in exchange for lower management fees. Cerberus’ two multi-billion dollar funds will specialize in distressed investments. The use of a lock up period is controversial because investors are unable to take their investment out if the fund starts to do poorly. Yet managers insist that it will be better long-term because it allows a hedge fund to invest without fear that limited partners will take back their pledged capital. Lock ups are employed so that investors do not leave a fund en masse causing it to collapse or sell assets for a low price in a down market. Watch the video here:

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Lock Up Period

Hedge Fund Lock Up Period

The period of time — often one year — during which hedge-fund investors are initially prohibited from redeeming their shares

Definition Source: Hedgeco

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