Fund liquidity mismatch
FRM Part 2 glossary · Current Issues
Definition
Mismatch between the liquidity promised to investors and the time or price required to liquidate underlying assets.
Fund liquidity mismatch in plain English
Open-ended funds holding private or thinly traded assets can face first-mover incentives during redemptions. Gates and side pockets manage the symptom but introduce their own investor and contagion risks.
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