If you thought zombies weren’t real, you’d be mistake. Hedge fund zombies do exist according to Forbes. Hedge fund zombies are gated funds that are for all intents dead but they exist in a zombified state where they keep collecting fees from their investors who are not allowed to withdraw their money:

What Wall Street bankers pushing hedge funds won’t tell institutional or retail clients about is the tens of billions of dollars locked up in hedge funds known as zombies. Clients with money in such funds face the horrific dilemma of paying management fees to hedge fund managers, even though they can’t get their hands on their money.

The insidious thing about these zombie hedge funds is:

“Today, these funds produce little if any financial return for their fiduciaries while their administrators continue to coast along, sitting on fund assets without making any effort to liquidate and return their holdings—yet still collecting their management fees.”

Sounds like a horrible deal. You want to cash out but you can’t and to top it off you have to keep on paying fees. The moral of the story is to watch lockup periods and gating clauses in any investment contract.