The following post provides a general summary of what every investor needs to know about the liquidation of an investment fund. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. If you have any questions concerning this subject matter, you should contact a qualified professional.
What is a fund liquidation?
A fund liquidation occurs when a fund closes down its operations completely, sells off its assets and generally distributes substantially all of its assets in cash to its shareholders. Fund liquidations may occur for a variety of reasons, including poor performance, a decline in assets under management, lack of investor interest, and more. A liquidation is different than a merger where one fund acquires the assets of another fund. In a merger, shareholders in the “acquired” fund receive shares of the new, “acquiring” fund rather than the proceeds from selling off fund assets. During a liquidation, all fund assets are distributed to shareholders.