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Investors look at LAMF as a way to unlock liquidity without selling funds
LAMF enables investors to raise short-term funds by pledging mutual fund units as collateral, helping meet liquidity needs while keeping investments intact and avoiding premature redemption.
Loan Against Mutual Funds, commonly referred to as LAMF, allows investors to borrow money by pledging their mutual fund units as collateral instead of redeeming them. Under this structure, ownership of the investments remains with the investor while funds are raised based on loan-to-value limits. The facility is generally used for short-term needs such as emergencies or cash flow gaps. Interest costs apply, and investors must monitor portfolio values to avoid margin-related issues.