However funds often do not have large amounts of cash available so if there are a great number of requests at one time the investor may find out that the fund is ?frozen? to withdrawal requests or their request may not be fully refunded. This generally occurs when a lot of investors choose to withdraw their money at the same time such as during the Global Financial Crisis. This can be particularly stressful for investors as they see the value of their investments plunge and cannot take any action.
The news doesn?t get any better as the fund can be suspended for months or even years before it is able to start satisfying withdrawal requests again. However, there are other ways for an investor to get some of their money back:
- Withdrawal offers: The fund may make a withdrawal offer up to certain amounts from the available cash they have which is in the best interest of all the investors, as it gives investors some cash;
- Hardship relief: The investor (through application by the fund to ASIC) may apply for hardship relief if the investor can prove exceptional financial hardship, e.g. unable to meet reasonable and immediate family living expenses, medical costs for a serious illness or prevent foreclosure; and
- Rolling withdrawal offer: A series of withdrawal offers within a 12-month-period. Note: Even though withdrawals are suspended, Funds may still be able to pay distributions to their investors and ironically the investor still incurs a tax liability.