General · Global
Fund structures explained
Limited partnerships, special purpose vehicles and feeder funds, and why the structure matters.
Summary
A fund structure decides who owns the assets, who controls decisions, who is liable and how money moves, so it is as important to understand as the underlying investment.
- Common structures include limited partnerships, special purpose vehicles and feeder funds.
- The structure affects tax, liability, reporting and your rights.
- Ask who holds the assets and who holds your money.
What is a limited partnership?
It is a common fund vehicle where investors are limited partners and a manager acts as general partner.
Limited partners usually have limited liability and limited control, while the general partner makes investment decisions. The partnership agreement sets out fees, distributions and what investors can and cannot do.
What is a special purpose vehicle?
A special purpose vehicle is a separate company or partnership created for a single investment or project.
It keeps one deal apart from other activities, which can simplify ownership and financing. It also means the vehicle may have a short history and no other assets, so the strength of the underlying project and its documents matters.
What is a feeder fund?
A feeder fund pools money from investors and invests it into another fund, often for tax or regulatory reasons.
Feeders can open access across countries or reduce paperwork, but they can add another layer of cost and another party to rely on. Ask what rights you have against the main fund.
What should you ask?
Ask which legal entity you invest in, who controls it, who holds the assets and cash, and who audits and reports.
Check where the entity is based, which law governs it, what happens if the manager changes or the structure is wound up, and whether independent parties such as a custodian or administrator are involved.
Frequently asked questions
Does an offshore structure mean higher risk?
Not by itself. Risk depends on regulation, governance, transparency and the underlying investment.
What does a custodian do?
It holds assets on behalf of investors, which can separate them from the manager's own assets.
What is an administrator?
An independent party that keeps records, calculates values and processes investor transactions.
Can I see the legal documents?
You should be able to read the offering and constitutional documents before committing.
This article is general information for eligible investors. It is not investment advice or an offer. Capital is at risk. See our Terms and Risk warning.
