A master feeder structure pools capital from multiple investor groups into a single investment vehicle known as the master fund. Investors commit capital through separate feeder funds. Each feeder contributes assets to the master fund, which executes investments and operations on their behalf.
A typical master feeder structure includes:
- one master fund holding portfolio assets
- multiple feeder funds serving different investor groups
- a single investment strategy executed at the master level
Master feeder structure vs master feeder fund
The master feeder structure refers to the overall architecture, including the master fund and its feeder vehicles.
A master feeder fund usually refers to the master fund itself, where pooled assets are invested. Investors access the strategy through feeder funds, whilst the master fund holds and manages the underlying assets.
Benefits of a master feeder structure
Fund managers use this structure to accommodate different regulatory, tax, or currency requirements without launching multiple standalone funds.
A common setup includes:
- an onshore feeder (such as a UK or Luxembourg fund) for EU or UK investors
- an offshore feeder (often domiciled in jurisdictions like the Cayman Islands or Jersey) for international investors
Both feeders invest into a single master fund, typically domiciled in Luxembourg.
Key benefits include:
- exposure to the same underlying portfolio across investor groups
- compliance with local tax, legal and regulatory frameworks
- centralised portfolio reporting and administration
Operational considerations of a master feeder structure
While centralising portfolio reporting and administration drives operational efficiency, the structure introduces additional complexity for fund administrators.
Common challenges include:
- coordinating capital flows across multiple legal entities
- managing reporting obligations across jurisdictions
Fund administrators must coordinate capital movements and reporting across all feeder funds and the master vehicle.
