Gate provision.
In plain English
A gate provision limits withdrawals from a fund to a set share of its assets, or of an investor's account, during any single redemption window. The purpose is to protect the fund from being forced to sell illiquid holdings at bad prices when many investors ask for money at once. When the gate is triggered, requests are usually filled proportionally and the rest is pushed to the next window. The terms sit in the fund documents and take effect automatically or at the manager's discretion, depending on how they are written. Gates make the fund more stable and make an individual investor's money less available exactly when they most want it.
01Why it matters
A gate is the reason money you expected to withdraw may not arrive, and it is most likely to be triggered during the kind of market stress when you would want cash.
02The math, step by step
Say a fund has a 10 percent quarterly gate and holds $200,000,000, so at most $20,000,000 can leave per quarter. Investors request $50,000,000. Each gets 20,000,000 divided by 50,000,000, or 40 cents on every dollar requested. A $100,000 request pays $40,000 now.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
A lock-up bars withdrawals entirely for a stated stretch after you invest, and you know the dates going in. A gate applies after the lock-up ends and caps how much can leave in a given window, so it can appear without warning.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice