Mutual funds can be used for a margin loan – up to 50% loaned to you in exchange for the entire value of the mutual fund or portfolio. If the mutual fund value drops below 50% when you max out your margin loan, the loan can be “called” by the financial institution. You have about 10 days to make up the difference, pay the margin loan back or give up whatever value of the mutual fund you need to make the loan balance whole.
If liquidity is what you need, you might want to get versed in the ways of leveraged cash value whole life insurance. It is much easier to create liquidity in these types of contracts and you don’t have to pay anything back in a structured loan agreement.