Stuck positions
How do I get my money out of a fund that has gated redemptions?
You have two main options: wait in the redemption queue and risk getting paid slowly at falling values, or sell your stake now to a secondary buyer at a discount, typically 12.5% to 20% below stated value. We can also go to your manager and run a secondaries process so investors who want out get liquidity without the manager having to deal with it directly.
The fund caps buybacks at around 5% of shares per quarter. When more investors ask to leave than that, everyone gets a proportional share of their request. Ask for US$1 million and you may get roughly US$510,000 in the first quarter, with the rest rolling forward.
Waiting carries real risk. Each payment comes at the value on the day it is paid, so any markdown while you wait hits every payment still to come. Redemptions and markdowns tend to happen together, so a slow queue and falling prices arrive at the same time. Our analysis shows that once exit requests reach 39% of the fund, selling now at 12.5% off beats waiting in every scenario we modelled.
We typically approach the manager and run the fund's secondaries process for them. The manager keeps running the fund. Investors who want out get liquidity. Buyers do their own work on the loans before they bid, so the price comes from what they will actually pay rather than the manager's model. If you've had a partial redemption notice, send us the notice and your latest fund report and we'll tell you what your place in the queue is potentially worth.