Zombie Fund

A Zombie Fund refers to an investment fund that is no longer actively managed or invested in new opportunities but still holds assets and continues to exist. These funds typically arise when the fund manager stops raising new capital and ceases to make new investments, often due to poor performance or an inability to attract new investors. Despite this, the fund still holds existing investments, which may be illiquid or difficult to sell. The primary goal of a Zombie Fund is to manage and eventually liquidate these remaining assets to return capital to investors. However, the process can be slow and inefficient, often resulting in lower returns for investors. The fund managers may continue to collect management fees, which can further erode the value of the remaining assets.

What is a Zombie Fund?

A Zombie Fund is an investment fund that is no longer actively managed or invested in new opportunities but still holds assets and continues to exist.

How Does a Zombie Fund Work?

Zombie Funds arise when the fund manager stops raising new capital and ceases to make new investments, often due to poor performance or an inability to attract new investors. The fund still holds existing investments, which may be illiquid or difficult to sell. The primary goal is to manage and eventually liquidate these remaining assets to return capital to investors. However, this process can be slow and inefficient, often resulting in lower returns for investors. Fund managers may continue to collect management fees, further eroding the value of the remaining assets.