This type of risk is more common in down or volatile markets where the fund can not meet the redemption needs of all the outgoing funds. (mutualfunds.com)
If there are not enough liquid assets to meet the redemption of liquid liabilities, the result is insolvency. (alephblog.com)
In the case of mutual funds, all investors must bear the tax when the fund has to sell securities just to meet the redemptions of certain shareholders. (freefrombroke.com)