Longer investment terms at vulture funds reduce the potential disruption from monthly, quarterly or even daily redemption requests. Historically, such funds offered their investors monthly or quarterly opportunities to pull their money out. That structure may provide a fund’s investors with liquidity, but managers say it is ill-suited to investments that can take years to pay off. As a result, funds, with their new, longer time horizons, are now persuading their investors to tie up money for longer. The assets are the loans they bought; their liabilities are the possible redemption requests from their investors.

Source: Wall Street Journal April 25, 2017 01:52 UTC