![]() The master fund can then allocates the feeders a percentage allocation of the master funds P&L based on their holding in the master fund. When the respective feeder invests, to the master fund it appears as an investment from one of its investors. In the majority of cases though the feeder will invest all its capital into the master fund and then withdraw capital when necessary to pay expenses. It can keep some capital back to pay expenses or even make direct feeder investments. It's good to note at this point that the feeder fund doesn't necessarily have to invest all of the capital received from the investor into the master. The feeder fund then takes this capital along with any other subscriptions and invests them into the master fund.įor their investment in the feeder the investor will receive a shareholding in the case of the Offshore Ltd feeder or a percentage allocation in the case of the Onshore LP feeder. Investing starts with the investor subscribing their cash into the feeder fund. Here we'll take a look at how the capital (investor's money) moves around the structure from one entity to the other. ![]() Finally the feeder funds allocate the P&L back down to the investor.Īt this stage the capital has flowed full circle from investor to feeder to master back to feeder and finally back to investor.Īs mentioned earlier when understanding master feeder funds following the flow of money can help. The P&L generated at the master fund is then allocated back to the two feeder funds. The master fund takes this cash and invests it on the markets. This capital then flows from the feeder fund into the master fund. One way to understand Master Feeder funds is a method that works for a lot of things in life - follow the money! An investor starts at the feeder fund where they invest their money. Onshore fund, Limited partnership organised in the U.S.A typical master feeder structure is comprised of:
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