Concept
A feeder fund is an intermediate investment vehicle that aggregates capital from multiple investors and enters a target fund (master fund) as a single LP with a unified tranche. The investor legally owns a share in the feeder, while the feeder owns a share in the master fund. This is the classic master-feeder structure, long used by hedge funds and private equity funds.
The purpose of the structure is to remove the minimum ticket barrier. An institutional fund (KKR, EQT, Sequoia) accepts commitments from $5–10 million; the feeder aggregates, for example, fifty subscriptions of $100,000 and enters as a single investor with $5 million.
🍓 A feeder is about access and aggregation, not a new strategy. The investment economics are determined by the master fund; the feeder merely adds a layer of administration, fees, and its own legal perimeter.
Where it's found
Master-feeder structures are used by: private markets access platforms (Moonfare, iCapital); private banks packaging funds for their clients; organizers of club co-investments—a similar but not identical mechanism through an SPV for a single deal.
Structure and participants
A feeder is typically a partnership (LP) or a tax-opaque company in a neutral jurisdiction: Luxembourg SCSp, Cayman, Delaware. It is managed by the organizer's management company or AIFM; the master fund remains a separate LP/GP partnership. The ownership chain: investor → feeder (LP of master fund) → master fund → portfolio assets.
| Parameter | Direct LP in fund | Through feeder |
|---|---|---|
| Minimum ticket | $5–10 million | from €25–100k |
| Relationship with GP | Direct | Indirect, aggregated |
| Voting rights / LPAC | Typically yes | Usually no |
| Fees | Fund only (2-and-20) | Fund + feeder layer |
| Reporting | Directly from GP | Through feeder organizer |
Economics and fees
The investor bears a double layer: the fund's fees and carry plus the feeder's charge—a one-time setup and/or annual management fee to the organizer. Capital calls follow the master fund's schedule, and the feeder passes them through to investors (see Capital calls in a fund).
What to check
- The feeder's jurisdiction and its tax transparency for the investor.
- Completeness of rights: voting, LPAC access, information rights—or only reporting.
- Total fee burden: fund plus feeder.
- Who is the feeder's administrator and custodian, and what happens in case of its insolvency.
- Liquidity: the secondary market for feeder shares is usually limited or non-existent.
🍓 A feeder fund opens access to funds closed by ticket size, at the cost of a second layer of fees and indirect LP rights. The key question for the investor is not "which fund," but "whose feeder, in which jurisdiction, with what rights and costs."
Key factual claims
- A feeder is typically a partnership (LP) or a tax-opaque company in a neutral jurisdiction: Luxembourg SCSp, Cayman, Delaware.