Short answerA lock-up, or holding period, is a period after investing during which units cannot be redeemed. It lets the fund invest in assets that cannot be sold quickly.
A lock-up, also called a holding period, is the time after you invest during which you cannot redeem your units, or can do so only with a penalty.
Why funds use it
Funds that hold property or infrastructure need stable capital because their assets cannot be sold quickly. A lock-up prevents large early withdrawals from forcing sales at poor prices.
Why it matters
During the lock-up your money is effectively unavailable, whatever happens to your circumstances or to the fund's value. Some funds also charge an exit fee for leaving early. Check the length of the period, any exit charge and whether it fits your plans before you invest.
General information. Not investment advice or a suitability assessment.
