Glossary

Lock-Up Period

Also known as: Lockup Period

A minimum holding period, typically one to three years from initial investment, during which an investor in an open-end fund is contractually restricted from submitting a redemption request.

A lock-up gives the manager time to deploy newly raised capital into assets before that capital becomes redeemable, avoiding a persistent cash drag from holding uninvested capital against the possibility of near-term redemption requests, and discourages investors from timing a short-term subscription purely to capture near-term NAV appreciation without bearing the fund's underlying illiquidity risk. A lock-up is conceptually distinct from a gate provision, which limits how much of an already-eligible redemption request can actually be paid once the lock-up has expired, and from a redemption queue, which governs when an eligible, ungated request is actually funded — the three mechanisms together define an open-end fund's true, as opposed to nominal, liquidity profile.