illiquidity
/ˌɪlɪˈkwɪdɪti/
Definition
The quality of an asset that cannot be easily or quickly sold or exchanged for cash without a significant loss in value.
Etymology
The word is derived from the Latin 'liquidus' meaning 'fluid or clear,' combined with the prefix 'il-' (a form of 'in-') meaning 'not.' It emerged in English to describe financial assets that lack the 'fluidity' or ease of conversion into cash that highly tradable stocks possess.
In the news
The article uses the term to describe the risk associated with investing in small, unquoted companies held by VCTs, which investors cannot easily cash out of at will. Because these assets are not traded on public markets, the text emphasizes that VCTs are only suitable for investors who can commit their capital for the long term.
What Are Venture Capital Trusts, and Should You Invest in Them?
Read the full article ↗Morningstar