What does the term 'lock-in period' refer to in hedge fund investments?

The term 'lock-in period' in hedge fund investments specifically refers to the minimum duration that an investor must hold onto their investment before they are allowed to withdraw their funds. This condition is designed to ensure that the fund has a certain amount of time to execute its investment strategy without having to deal with potential withdrawals, which could disrupt its operations or liquidity. This feature is particularly important in hedge funds, which often pursue complex strategies that require stable capital. Investors agree to this lock-in period as part of the terms of their investment, and it can vary significantly between different funds.

The other options relate to different concepts in finance. The required duration to hold shares before selling applies more to stock investments or specific situations involving securities, not commonly to hedge fund investments. The time limit before additional investments can be made could refer to fund raising or capital calls but does not represent the primary meaning of a lock-in period. The period before the fund begins trading could relate to the establishment phase or fundraising stage, but it does not define the lock-in nature of an investment.