Gate Provision

What is ‘Gate Provision’

A restriction placed on a hedge fund limiting the amount of withdrawals from the fund during a redemption period. The implementation of a gate on a hedge fund is up to the hedge fund manager. The purpose of the provision is to prevent a run on the fund, which could cripple its operations, as a large number of withdrawals from the fund would force the manager to sell off a large number of positions.

Explaining ‘Gate Provision’

This is a very common provision on a hedge fund and the exact percent of restriction can be found in the hedge fund prospectus. This is a less severe withdrawal restriction than an all out redemption suspension, which doesn’t allow for withdrawals at all. But a gate provision is still seen generally as a negative event.

Further Reading

  • Rediscovering the 'gate'under market transition: from work-unit compounds to commodity housing enclaves – [PDF]
  • The Economics of a Sports Industry: Scottish Gate‐Money Football, 1890–1914 – [PDF]
  • Small States and the Creation of EMU: Belgium and the Netherlands, Pace‐setters and Gate‐keepers – [PDF]
  • The normative economics of health care finance and provision – [PDF]
  • New barbarians at the gate: losing the liberal peace in Africa – [PDF]
  • Inelastic sports pricing at the gate? A survey – [PDF]
  • Do lenders favor politically connected firms? Rent provision in an emerging financial market – [PDF]
  • Barbarians at the gate of the middle Kingdom: The International mobility of financing contract and governance – [PDF]
  • From futures markets to the farm gate: a study of price formation along Tanzania's coffee commodity chain – [PDF]