Redemption Suspension

AAA

DEFINITION of '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 EXPLAINS 'Redemption Suspension'

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
  1. Hedge Fund

    An aggressively managed portfolio of investments that uses leveraged, ...
  2. Aggressive Investment Strategy

    A portfolio management strategy that attempts to maximize returns ...
  3. Redemption

    The return of an investor's principal in a fixed income security, ...
  4. Gate Provision

    A restriction placed on a hedge fund limiting the amount of withdrawals ...
  5. Redemption Fee

    A fee collected by an investment company from traders practicing ...
  6. Liquidity Risk

    The risk stemming from the lack of marketability of an investment ...
RELATED FAQS
  1. How can I calculate the Macaulay duration of a zero-coupon bond?

    The funds from operations is a measure of the amount of cash flow that a business's operations generates. Real estate investment ... Read Full Answer >>
  2. What are the advantages of hiring a third-party marketing company?

    Hiring a third-party marketing company's services offers a number of advantages for businesses - primarily savings, since ... Read Full Answer >>
  3. What risks are associated with a closed end investment?

    A closed-end fund is an investment instrument that is listed on an exchange and trades much like common stock shares. Its ... Read Full Answer >>
  4. Can an investor use leveraged ETFs to invest in the airline sector?

    As of 2015, there are no leveraged exchange-traded funds (ETFs) available to track the airline industry within the transportation ... Read Full Answer >>
  5. What's the difference between a collateralized mortgage obligation (CMO) and a mortgage-backed ...

    A mortgage-backed security, or MBS, and a collateralized mortgage obligation, or CMO, are different types of asset-backed ... Read Full Answer >>
  6. How do spinoffs differ from initial public offerings (IPOs)?

    A spinoff is when a public parent company organizes a subsidiary and distributes shares to current stockholders for the new ... Read Full Answer >>
Related Articles
  1. Options & Futures

    A Brief History Of The Hedge Fund

    Find out how this U.S.-born investment innovation became a $1-trillion industry that's both praised and vilified by the media.
  2. Options & Futures

    Hedge Funds: Higher Returns Or Just High Fees?

    Discover the advantages and pitfalls of hedge funds and the questions to ask when choosing one.
  3. Options & Futures

    Hedge Funds Hunt For Upside, Regardless Of The Market

    Hedge funds seek positive absolute returns, and engage in aggressive strategies to make this happen.
  4. Mutual Funds & ETFs

    Top Skills Hedge Funds Look For In Job Candidates

    Lucrative salary, high perks, and best quantitative brains at work. What are the top skills a candidate needs to get a job at a hedge fund?
  5. Mutual Funds & ETFs

    Why Hedge Fund Managers Make Good Advisory Clients

    Super-busy hedge fund managers should be viewed as an opportunity for sophisticated financial advisors who can step in and offer their services.
  6. Professionals

    A Look at How the Ultra-Wealthy Invest

    Ultra-wealthy investors are cautious this year as they approach the markets. Many target mutual funds and stocks, but most also diversify their portfolios.
  7. Investing

    Should You Buy Marijuana Stock?

    The legalization of marijuana has created a new investment niche: pot stocks.
  8. Forex

    Is Bitcoin Mining Still Profitable?

    Recent changes in technology and the creation of professional mining centers individual miners are asking themselves, is bitcoin mining still profitable?
  9. Professionals

    With Rates Low, Where Can Advisors Find Yield?

    There are many different options — both conventional and unconventional — available for financial advisors seeking yield and alpha for their clients.
  10. Investing Basics

    Calculating Funds from Operations

    Funds from operations (FFO) measures the performance of a real estate investment trust (REIT) and other similar types of investments.

You May Also Like

Hot Definitions
  1. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  2. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  3. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  4. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  5. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
  6. Product Line

    A group of related products manufactured by a single company. For example, a cosmetic company's makeup product line might ...
Trading Center