What is a feeder fund? (2024)

FAQs

What is a feeder fund? ›

A feeder fund is a fund which pools investment capital and invests into a master fund. The master fund invests in the market, makes portfolio investments, and trading in securities. An investment advisor, in turn, handles all the investments.

What Is a Feeder Fund? A feeder fund is one of several sub-funds that put all of their investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading.

For an example of feeder funds, we can look to investment management firm BlackRock's master portfolios. BlackRock offers two money market master funds, the Treasury Money Market Master Portfolio and the Money Market Master Portfolio. An investor wouldn't actually invest their money directly into those funds.

A feeder fund is a type of investment fund that does the majority of its investments through a master fund, using a master feeder relationship. It is similar to a strategy called fund of funds, but the main difference is that the master fund does all the investing.

Feeder funds are a good option when you're on a tight budget but still want to get started with investing. With these investments, even higher-priced funds are within reach, as long as they have a feeder fund. Adding to their affordability, feeder funds also usually have lower fees than UITFs.

With a feeder fund, you pay capital gains tax on both the Rand depreciation and the capital gain of the investment. With a direct offshore investment, assuming the investor is only invested in one currency, the capital gain is determined in the foreign currency and then multiplied by the exchange rate.

A Target Fund is any local or foreign Collective Investment Scheme (CIS) in which a Feeder Fund invests at least 90% of its assets. Examples of a CIS are Unit Investment Trust Funds (UITFs), Mutual Funds (MFs) and Exchange Traded Funds (ETFs).

For Feeder Funds in particular here are some of the common risks that investors should be aware of: Interest Rate Risk. Market/Price Risk. Liquidity Risk.

An umbrella fund allows a fund to create compartments such that each sub-fund can provide different investment strategies or rights to investors. A master-feeder structure allows multiple funds using the same investment strategy to pool their capital and be managed as part of a bigger investment pool.

The advantage of investing in a feeder fund is that it allows individual investors to access investments that they would not be able to access otherwise. It also allows investors to gain exposure in securities which are only available offshore.

What is a feeder fund quizlet? ›

Feeder Fund. A hedge fund that gets investments to feed a larger investment firm.

Parallel Funds are different from Feeder Funds. While Feeder Funds “feed” into the main “Master Fund” which carries out all the investing activities, Parallel Funds invest alongside each other in the same portfolio investments.

The generally accepted accounting principles (GAAP) basis classification divides funds into three broad fund categories: Governmental, Proprietary, and Fiduciary.

There are three types of funds of the Central Government – Consolidated Fund of India (Article 266), Contingency Fund of India (Article 267) and Public Accounts of India (Article 266) mentioned in the Indian Constitution. The topic, 'Types of Funds in India' comes under GS-II – Indian Polity syllabus of the IAS Exam.

The primary difference, of course, is that a feeder fund—by buying into the master fund—receives all of the master fund's income attributes, including interest, gains, tax adjustments, and dividends.

Equity funds are the best mutual funds to invest in for the long term. Opt for a growth mutual fund option to easily reach your long-term goals, as the fund's returns will compound over time.

A feeder fund (“Feeder”) is an investment vehicle, often a limited partnership, that pools capital commitments of investors and invests or “feeds” such capital into an umbrella fund, often called a master fund (“Master”), which directs and oversees all investments held in the Master portfolio.

Differences between Direct and Regular Plans

Since TERs of regular plans are higher than those of direct plans, the NAVs of direct plans are higher than the regular plans. In other words, your investment value after you have made your purchase will always be higher in a direct plan compared to a regular plan.

One of the key distinctions between them is that regular mutual funds (MFs) have a distribution commission while direct mutual funds do not. This makes the expense ratio higher for regular funds. The expense ratio is the fund's total expenses to its assets under management (AUM).

What is the expense ratio of feeder funds? ›

Franklin India Feeder Franklin US Opportunities Fund-Growth has ₹2,880 Crores worth of assets under management (AUM) as on 31/12/2022 and is medium-sized fund of its category. The fund has an expense ratio of 1.61%, which is higher than what most other.

A feeder fund is an investment vehicle that allows investors to pool their money and invest in a larger target fund. This target fund is used to invest in funds that are typically not available and accessible to retail investors.

While Feeder Funds “feed” into the main “Master Fund” which carries out all the investing activities, Parallel Funds invest alongside each other in the same portfolio investments. Parallel investment vehicles are generally formed to invest in and divest from the same investments at the same time as the main fund.

An umbrella fund allows a fund to create compartments such that each sub-fund can provide different investment strategies or rights to investors. A master-feeder structure allows multiple funds using the same investment strategy to pool their capital and be managed as part of a bigger investment pool.

Feeders work on machines inside a factory, "feeding" or loading raw ingredients for the product they are supposed to make. They are typically also responsible for unloading the finished products.

: a device for supplying food. bird feeder. : a branch (as of a river or a transportation system) that supplies or connects to another. : one that eats. especially : an animal being fattened or suitable for fattening.

Advantages of the Master-Feeder Structure

One significant advantage of the master-feeder structure is the consolidation of various portfolios into one entity. Consolidation allows for reductions of operation and trading costs. A larger portfolio has the benefit of economies of scale.

While all funds have different strategies and aims, there are two main types of fund available: active funds and passive funds.

External sources of financing fall into two main categories: equity financing, which is funding given in exchange for partial ownership and future profits; and debt financing, which is money that must be repaid, usually with interest.

Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds, and target date funds. Each type has different features, risks, and rewards.

Which is better hybrid fund or balanced advantage fund? ›

All hybrid funds allocate the fund assets to equities and debt securities in a fair ratio but they may be bent towards one asset class by a higher percentage of investments. On the other hand, balanced funds allocate the fund corpus to both asset types in a balanced ratio.

Financial Terms By: b. Blocker Corporation. A blocker corporation is a type of C Corporaton. Tax exempt investors and foreign investors often set up offshore feeder corporation known as a blocker corporation when they invest in private equity or hedge funds in order to avoid US trade or business income tax.