A lock-in period is a predetermined timeframe during which investors cannot redeem or sell their investment in financial instruments like mutual funds. The issuer specifies this duration to give stability and deter short-term trading, therefore promoting long-term investment. Lock-in terms fall in months to several years. For example, although Equity Linked Savings Scheme (ELSS) funds have a 3-year lock-in time, Unit Linked Insurance Plans (ULIPs) often have a 5-year lock-in period. Lock-in clauses help investors remain to benefit from long-term growth and stay to their investments. They also let fund managers remove halt shares or illiquid investments from the flood of markets after an IPO.
A lock-in period is a predetermined timeframe during which investors cannot redeem or sell their investment in financial instruments like mutual funds. The issuer specifies this duration to give stability and deter short-term trading, therefore promoting long-term investment. Lock-in terms fall in months to several years. For example, although Equity Linked Savings Scheme (ELSS) funds have a 3-year lock-in time, Unit Linked Insurance Plans (ULIPs) often have a 5-year lock-in period. Lock-in clauses help investors remain to benefit from long-term growth and stay to their investments. They also let fund managers remove halt shares or illiquid investments from the flood of markets after an IPO.
