Liquidity
Chapters in this video
- 0:00 The liquidity spectrum gut check: private funds and the one-year lock-up
- 1:22 Open-end versus closed-end fund redemption and pricing rules
- 3:04 ETFs and UITs: creation and redemption mechanism versus static portfolios
- 4:12 The illiquid extremes: non-traded REITs and private fund lock-up periods
- 5:17 Master liquidity comparison across all fund types
- 5:53 Rapid-fire exam recap: seven days, forward pricing, and lock-up signals
What this video covers
- Why open-end mutual funds must redeem shares within 7 calendar days and how forward pricing determines whether you get today's or tomorrow's net asset value (NAV)
- The closed-end fund liquidity model: no redemption right with the fund itself, continuous intraday pricing on exchanges, and the availability of margin and short selling
- How exchange-traded funds (ETFs) use the creation and redemption mechanism with authorized participants (APs) to keep market price anchored to NAV
- Why unit investment trusts (UITs) are redeemable with the trust yet far less liquid than mutual funds, with limited secondary markets
- The illiquid extremes: how private funds (hedge funds, private equity, venture capital) use lock-up periods, gates, and quarterly or annual redemption windows
- Why non-traded real estate investment trusts (REITs) may suspend redemption programs entirely and typically require 5-7+ year holding periods
- The economic pattern that margin and short selling are reserved exclusively for exchange-traded vehicles (closed-end funds and ETFs), never for open-end funds, UITs, or private funds
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 65 course also includes adaptive practice questions and spaced-repetition flashcards, free through December 31, 2026.