- A structure commonly used by hedge funds to pool investment capital raised by U.S. investors - both taxable and tax-exempt - and overseas investors into one central vehicle called the master fund, with separate investment vehicles or feeders created for each investor group. Investors invest in the feeder funds, which in turn invest their assets in the master fund. The master fund makes all the portfolio investments and conducts trading activity, while management and performance fees are payable at the feeder-funds level.
One master-feeder fund advantage is that its structure enables consolidation of multiple portfolios into one, which reduces trading and operation costs. It also has economies of scale and, by virtue of its size, can obtain better service and favorable terms from prime brokers and other institutions.
A major master-feeder fund disadvantage is that offshore funds are usually subject to withholding tax on U.S. dividends. As well, the structure combines investors with very different characteristics and investment priorities, and investments and strategies that are appropriate for one type of investor may not be appropriate for another type of investor.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Feeder Fund — One of several funds that feed into an umbrella fund called the master fund, which oversees all portfolio investments and trading activity. A feeder fund s structure is commonly used by hedge funds to pool investment capital. The master fund s… … Investment dictionary
Master-feeder — The master feeder structure allows asset managers to capture the efficiencies of larger pools of assets (see economics of scale) although fashioning investment funds to separate market niches. One or more investment vehicles pool their portfolio… … Wikipedia
Feeder fund — Un Feeder Fund ou fonds nourricier est un fonds d investissement qui opère virtuellement l ensemble des investissements à travers un autre fonds appelé fond maître ou master fund. En fait, le fonds nourricier est un fonds dont la vocation… … Wikipédia en Français
feeder fund — noun An investment fund which does almost all of its investments through a master fund via a master feeder relationship … Wiktionary
Master Fund — In general, an investment vehicle that enables individual investors to invest money into one or more underlying investments that are operated by professional managers. Master funds can generally be categorized into three types: discretionary… … Investment dictionary
Hedge fund — A hedge fund is a private investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment funds and which pays a performance fee to its investment manager.… … Wikipedia
Undertakings for Collective Investment in Transferable Securities Directives — The Undertakings for Collective Investment in Transferable Securities Directives 2001/107/EC and 2001/108/EC (or UCITS ) are a set of European Union Directives that aim to allow collective investment schemes to operate freely throughout the EU on … Wikipedia
Hub And Spoke Structure — An investment structure in which several investment vehicles, while each remaining individually managed, pool their assets together by contributing to one central investment vehicle. The smaller investment vehicles are referred to as the spokes… … Investment dictionary
Life Sciences — ▪ 2009 Introduction Zoology In 2008 several zoological studies provided new insights into how species life history traits (such as the timing of reproduction or the length of life of adult individuals) are derived in part as responses to… … Universalium
Business and Industry Review — ▪ 1999 Introduction Overview Annual Average Rates of Growth of Manufacturing Output, 1980 97, Table Pattern of Output, 1994 97, Table Index Numbers of Production, Employment, and Productivity in Manufacturing Industries, Table (For Annual… … Universalium