A redemption is an investor's sale of fund shares back to the fund at NAV. The investor gives notice, the shares are cancelled on the dealing day and proceeds are paid out at the NAV for that day, subject to the fund's notice period, lock-up and any gate.
Redemption terms are the main liquidity protection in an open-ended fund. Notice periods give the manager time to raise cash; lock-ups prevent redemption for an initial period; gates cap the percentage of the fund that can be redeemed on one dealing day. All are set in the offering documents and disclosed to investors before they subscribe.
A fund can also compulsorily redeem an investor, for example if the investor ceases to be eligible or fails a sanctions check.
Redemption terms for POD funds are set per fund by the manager and stated in its documents. Redemptions are processed at the dealing-day NAV and settled to the investor's registered bank account or wallet. [CONFIRM: typical settlement time after the dealing day.]
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