masterfond

Masterfond, also referred to as a master fund (the English term), is an investment fund structure commonly used in Europe. It designates the central investment vehicle that holds the assets and conducts the investment strategy, while one or more feeder funds raise capital from investors and invest into the master fund. In this arrangement, the feeder funds issue units to investors and forward all committed capital to the master fund, which aggregates and allocates the investments across its portfolio.

The master fund and its feeders form a master–feeder structure. This configuration allows investors in different feeder funds to participate in a single, consolidated investment strategy managed by the master fund. The master fund’s net asset value determines returns and distributions shared by all feeders, enabling centralized portfolio management, risk oversight, and potentially streamlined liquidity management.

Regulatory and tax considerations shape the use of masterfonds. They are commonly employed for hedge funds, private equity, and other alternative investment strategies, especially in jurisdictions that allow cross-border marketing and pooling. Jurisdictions frequently used for master funds include Luxembourg and Ireland, among others, with feeders located in various countries to accommodate different investor bases and currency needs. While the structure offers efficiency and scalability, it also introduces governance complexity, potential tax and withholding considerations, and heightened regulatory reporting requirements.

In practice, masterfonds are favored by asset managers seeking to pool capital from diverse investors under a single investment strategy, while maintaining separate investor pools through feeders.