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Gate

A limit on the proportion of a fund that may be redeemed in a given period. Protects the portfolio in stress, and is long remembered by investors when used.

Gate — A limit on the proportion of a fund that may be redeemed in a given period. Protects the portfolio in stress, and is long remembered by investors when used.

Gates protect the remaining investors in a fund, not the ones trying to redeem — which is exactly why they're controversial and long-remembered by investors who experience one: the mechanism that protects the portfolio does so at the direct expense of the person invoking it.

Frequently asked questions

Why would a fund impose a gate?

To prevent a wave of simultaneous redemption requests from forcing the manager to sell illiquid positions at distressed prices, which would harm the investors who remain in the fund.

Do gates damage a manager's reputation?

Often significantly and for a long time — investors who experience a gate tend to remember it well beyond the specific incident, making it a genuine long-term fundraising consideration.

Nothing on this page is legal, tax, or investment advice. SeRuM is not a registered broker-dealer, not a placement agent, and not an investment adviser.

Evergreen fundAn open-ended structure with periodic subscriptions and limited periodic redemptions, rath Closed-end fundA fund with a fixed life and no ongoing redemptions. Standard in private equity, venture a

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