Lockup
InvestingDefinition
Period during which fund investors cannot redeem capital. Common in hedge funds (1-2 years) and PE (entire fund life, 10+ years).
Lockups let managers hold less-liquid positions without forced selling pressure. Investors demand return premia for accepting lockups. "Soft lockup" charges a redemption fee (3-5%) for early withdrawal; "hard lockup" forbids withdrawal.
Lockups let managers hold less-liquid positions without forced selling pressure. Investors demand return premia for accepting lockups. "Soft lockup" charges a redemption fee (3-5%) for early withdrawal; "hard lockup" forbids withdrawal.