Liquidating a mutual fund
Securities that are not widely traded may be hard to sell, especially when a fund dumps its often large holdings at one time.
Unless the fund company arranges the asset sales in an orderly manner, shareholders may incur investment losses from a fund liquidation.
A variety of reasons may induce the investor to do this, but the most common one is simply a belief that the security price will fall.
On Friday, September 9, 2011 the fund reorganizations listed above took place.
Liquidating a position may simply mean selling stock or bonds; the seller in this case receives the cash.
A poorly performing fund can become inoperable sometimes as a result of increased shareholder redemption.
Liquidation often has a negative connotation for this reason. To sell all the stock or debt securities of a particular type.
For example, a portfolio manager might decide to liquidate a position in a stock by selling all the shares of that stock held in the portfolio.
Merging a fund with another fund that has a different investment focus may negatively affect shareholders of the fund being liquidated.
For example, a new, large-cap fund may not fit the needs of the shareholders whose liquidated fund was originally small-cap oriented.
Search for liquidating a mutual fund:
If a fund is sold outright, the fund distributes the proceeds to its fund shareholders.