What is a "zombie fund" in investing?
I'm a begineer when it comes to private equity, and am really confused with the term "zombie fund". Was wondering if someone could explain what "zombie fund" means in simple comprehensible language.
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Answers ( 1 )
It's a fund that isn't taking money from new investors. Some funds are retired in this way -- they don't force the shareholders to sell, but they don't allow new people to buy into the fund (although they sometimes allow existing investors to add more money).
It's an odd place to be because buying and selling assets are how their values are determined and zombie funds have very little activity -- so it can become difficult to know what they're worth or how the fund will eventually end.
The good news is that as a new investor, you don't have to worry about it -- by definition, you're not allowed to invest in one!