Partial Redemption

Posted in Finance, Accounting and Economics Terms, Total Reads: 369
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Definition: Partial Redemption

Partial redemption is a type of transaction in investment redemption types. An investor can choose to do a partial redemption of his investment in the security from his account rather than a full redemption. What this essentially means is that the investor can take out only a part of the security’s value that is there in his account and prefer to keep the remaining amount invested in the instrument.


The amount that the investor withdraws through a partial redemption includes some portion of the principal invested along with some interest. An example of why an investor would choose to do such a transaction can be when his present investment has made some huge gains but the investor would not want to risk too much as he thinks that the market has turned volatile. So he decides to take out some investment and invest in some securities which are not so volatile but he still keeps some money in this security as he doesn’t want to lose out on further appreciation of price of the security.


The investor can choose which specific assets in the security he wants to redeem and which assets he wants to be invested in. For example, in a security which has invested in equities across the globe, the investor would now feel that the situation in emerging markets has turned risky and wants to redeem his investment made in those assets.

 

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