User:WWB Too/Hedge fund structure (Open-ended nature)

Open-ended nature
Hedge funds are typically open-ended, meaning that the fund will periodically accept the admission of additional investors and allow existing investors to withdraw their money from the fund at specified intervals (e.g. monthly, quarterly or semi-annually), usually following a fixed lock-up period. New shares are issued when an investor buys, while existing shares are redeemed and canceled when an investor makes a withdrawal. Hedge fund shares and limited partnership interests generally do not trade in the secondary market (although there are limited secondary markets for such trading) and hedge funds do not typically distribute profits to investors before redemption. This contrasts with a closed-ended fund, which either has a limited number of shares which are traded among investors, and which distributes its profits, or which has a limited lifespan at the end of which capital is returned to investors.