Liquidating a fund


02-Feb-2019 00:29

As investment funds continue to face challenges in meeting performance benchmarks and as investors become less tolerant of paying management fees for underperformance, many fund managers are determining that liquidating their funds is the best course of action.

As a result, questions concerning the implementation of the Financial Accounting Standards Board (FASB)accounting and financial reporting guidance on adopting the liquidation basis of accounting are becoming more frequent.

It is the first survey of this kind that ALFI and KPMG Luxembourg have carried out.

We hope that you will enjoy it and find it useful for your business.

Once the liquidation basis of accounting is adopted, the assets and liabilities of an investment fund should be measured at estimated collection or settlement amounts (net realizable value).

The following financial statements, at a minimum are required to be presented upon adoption of the liquidation basis of accounting: Financial statements should disclose the investment fund’s plan of liquidation and its effect on the fund’s financial statements.

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While the accounting guidance does not require separate presentation for the period preceding adoption of the liquidation basis of accounting, an investment fund should consider the requirements of its regulator and the needs of any other users of an investment fund’s financial statements.Such costs might include legal fees, management and incentive fees and administrative costs.In recognizing income earned during the liquidation period, expected earnings on assets would not be recognized when those earnings are already reflected in the net realizable values of the assets of the investment fund.While many of the managers and traders at these funds will go on to work for other firms, many of these managers and traders will start new hedge funds and potentially with some of the same investors.



Feb 7, 2018. Mutual fund liquidations, also referred to as "full closures," are never good news. Liquidation involves the sale of all of a fund's assets and the distribution of the proceeds to the fund shareholders. At best, it means shareholders are forced to sell at a time not of their choosing. At worst, it means shareholders.… continue reading »


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What is the optimal process to put a fund into liquidation given the circumstances? How to streamline the formal liquidation process in the pre-liquidation period? What accruals and provisions for the final net asset valuation are required to ensure a solvent liquidation? How to resolve regulatory, accounting, tax and other.… continue reading »


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Oct 7, 2008. Hedge Fund Liquidation Procedure. 1 Reply. It has been a tough year for many managers and there are many funds that will be shutting their doors before the end of the year. Funds may decide to close their door for many reasons which might range from poor performance to large amounts of investor.… continue reading »


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While mutual funds are designed for long-term investment, there may come a time when you want to pick your own investments, switch to a better fund or simply withdraw the money for unexpected expenses. Before you liquidate your mutual fund, pay attention to the possible costs involved, including taxes, to avoid any.… continue reading »


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Liquidating an asset is carried out when an investor or portfolio manager needs the cash to re-allocate funds or re-balance the portfolio. An asset that is not performing well in the markets may also be partially or fully liquidated to minimize or avoid losses. An investor who needs cash to fulfill other non-investment obligations.… continue reading »


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In the past, the liquidation process was a responsibility of the fund's directors or the central administration. However, the use of a third party adviser as liquidator has become more and more common. There are many benefits in adopting this alternative, but one of the strongest arguments is clearly the indisputable.… continue reading »


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