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By Frank van KUIJK, Marc MEYERS, Christophe BOYER, Benjamin HITZGES Sebastiaan HOOGHIEMSTRA, Loyens Loeff Luxembourg
Semi-liquid alternative investment funds combine investments in illiquid assets with investor liquidity. To manage liquidity tensions, redemptions may be restricted once they exceed a certain level. Restrictions may take the form of redemption caps or redemption gates.
A cap applies automatically when a pre-set threshold is exceeded. If the cap is hard, it cannot be switched off by the manager. If it is soft, it can be switched off when there is sufficient liquidity, allowing the manager to satisfy redemption requests above the set level.
Gates, by contrast, can be switched on by the manager once a...
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