This represents the window of time when investors in a hedge fund are not allowed to redeem (sell) their holding. There are two types of lock-ups; hard lock-ups and soft lock-ups. Investors are forbidden from redeeming during a hard lock-up under any circumstances. In a soft-lock up period, investors can redeem but must pay a penalty (typically 1-5% of the investors net asset value) in order to do so. The penalty is typically paid to the fund, and so benefits the other investors in the fund. Lock-ups were created to prevent investors from trading into and out of hedge funds, with the aim of providing the GP with a more stable base of capital and allowing it to take longer-term positions.