Funds & wrappers
Gating
Also called Redemption suspension
A fund limiting or suspending withdrawals because it cannot sell holdings fast enough.
How it works
Gates exist to stop a rush of redemptions forcing fire sales that damage remaining investors. They protect the fund and trap the investor.
They appear where a fund promises daily dealing while holding assets that take much longer to sell — property funds are the recurring example.
Where it misleads people
Gates are imposed precisely when people most want their money. A liquidity mismatch is invisible in normal conditions and total in a crisis.
Related terms
- Liquidity riskThe risk of not being able to sell when you want to, without accepting a bad price.
- Mutual fundA fund that creates and cancels units on demand, priced once a day at net asset value.
- Net asset valueThe value of everything a fund owns, minus what it owes, divided by the number of units.
- Private equityFunds that buy whole companies not listed on a public market, usually using substantial debt.
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