Redemption Queue
A redemption queue is a backlog of redemption requests that could not be fully processed and are carried forward to future redemption windows.
Allocator relevance: A real liquidity risk signal—queues imply constrained liquidity and can persist through market stress.
Expanded Definition
When redemption demand exceeds the fund’s ability or permitted limits to pay out, requests are prorated and the remaining amount is placed in a queue. Queues can create uncertainty over timing and may lead to investor behavior changes (more redemption requests, less trust). Queue duration depends on asset liquidity, market conditions, and the fund’s redemption limits.
For allocators, queues must be incorporated into liquidity planning and risk monitoring.
How It Works in Practice
The fund processes redemptions up to a cap each period. Unmet requests roll forward. Some structures prioritize older requests; others prorate continuously.
Decision Authority and Governance
Governance determines disclosure, prioritization rules, and whether redemption policies can be amended or suspended. Investors evaluate fairness and transparency under stress.
Common Misconceptions
- Queues are short-lived administrative delays.
- A queued redemption will be processed next period for sure.
- Queues only happen in poorly run funds.
Key Takeaways
- Queues indicate liquidity stress and timing uncertainty.
- Understand queue rules and historical behavior.
- Plan liquidity assuming slower-than-expected redemptions.