Structures · room 03 of 11
Master and feeder.
One master fund runs the portfolio and two or more feeders subscribe into it, each constituted where its own population needs it to be. That answers a wrapper problem and creates a second fund, with its own rung, its own register and its own forum.
01 · What the topology is
One portfolio, two doors
One master runs the portfolio. Everything above it is a second fund.
A master and feeder topology separates the vehicle that pools from the vehicles that subscribe. Four facts settle what that costs, and the fourth is the one nobody prices at the term sheet.
- What the master is
One vehicle holding the entire portfolio and running the strategy. One investment committee, one set of assets, one place where the decisions land, where the property is custodied and where the borrowing ordinarily sits. Feeders hold participating interests in it, ordinarily pro rata to contributed capital.
- What a feeder is
A fund in its own right. Its own domicile, its own rung on the tier ladder, its own offer document written to that rung's standard, its own register and holder count, its own administrator and audit, its own subscription documents and its own forum clause. It holds one asset: its interest in the master.
- What the topology buys
One portfolio, one investment committee and one set of assets, presented as two or more legally distinct wrappers to populations that will not accept the same one. The existing master keeps its record, its portfolio and its lender relationships, and the new capital reaches it without subscribing to it directly.
- What the topology costs
Every item in the definition of a feeder, once for each feeder. None of it travels from the master, none of it is answered by the fact that the money ends in the same portfolio, and each item is created by a different instrument from the one that creates the master.
One portfolio is a fact about the assets. It is not a fact about the funds, and the documents belong to the funds.
02 · The stack
The tiers, top to bottom
Four tiers stand in this chain, and the common error is counting three.
Read the chain downward, from the investor to the asset. The manager sits at the foot of the drawing rather than on it, because it holds nothing in the chain and is therefore not a tier.
The chain, top to bottom
- 00 The investor populations Two populations, or more. One needs a wrapper seated where it can hold one; the other will not leave the wrapper it already knows. Each subscribes only to its own feeder, on that feeder's documents, and sees the master only through them. Two doors
- 01 The feeders This is the stratum that binds. Each feeder is a fund: its own rung, its own document standard, its own register, its own holder count, its own administrator and its own forum. Nothing on the tier below travels up, so every obligation on this line has to be met again, feeder by feeder, in documents that were drafted separately. Binding
- 02 The master fund Holds the whole portfolio, executes the strategy, custodies the property and carries the borrowing. It issues participating interests to the feeders and to nobody else, and its constitution is the document the feeders' investors are least likely to have read. Portfolio
- 03 The asset-holding chain Holding companies and one vehicle for each asset beneath the master, so a single asset can be sold, refinanced or lost without reaching the others. Drawn in outline here and in full at holding chains. Ring-fence
- · The manager Contracted to the master, and frequently to each feeder as well, under the fund management permission of its own regulator. It owns no part of the chain, which is why it is an attachment to the stack and not a rung on it. Contract
No obligation on one tier is discharged by the tier beneath it, and each vehicle in the chain is constituted by a different instrument. A structure paper naming one fund has described the portfolio and left the funds undrawn.
Three of the four tiers hold a constituted vehicle, and no two of them are constituted by the same instrument. The count is the first thing a structure paper gets wrong.
03 · The two legs
Down, and up
Capital descends in two calls. Proceeds return through two crossings for every feeder.
Three facts govern the down leg, which is where cash sits idle or a feeder is late. The up leg is where the topology earns its keep, and it is where the topology breaks.
Each investor commits to its own feeder, on that feeder's subscription documents, against that feeder's closing calendar and into that feeder's register. Nothing in that sentence is shared with the other population, and the commercial terms behind it were negotiated twice.
A feeder calls its investors and then subscribes into the master. The master calls the feeders and then funds the asset. Two events, not one. The lag between them is where cash sits uninvested, and a feeder that is late is late to the master rather than to the asset, which changes who bears the consequence.
Feeders admit on their own closing calendars and the master deals on its own dates. Where the portfolio has already moved by the time a later subscriber is admitted, the mechanic that allocates gains, losses and costs already accrued is a term of the documents and nothing else. It is written there or it does not exist, and the computation is the administrator's and the auditor's.
One portfolio produces one set of proceeds. It does not produce one outcome per investor, and the difference is made at the crossings.
04 · When it is reached for
The occasions
The topology holds where the wrappers differ and the portfolio does not.
Two conditions have to be true together: the populations need different wrappers, and they need the same assets, the same borrowing, the same timing and the same economics. Five occasions decide it, and three of them are refusals.
Two populations that cannot subscribe to one vehicle, and one portfolio neither of them disputes. A feeder is the cheapest honest answer to that, and this is the first of the two occasions on this list where the topology is being asked to do the thing it does.
There is a master with a record, a portfolio already inside it and lender relationships worth keeping, and the new capital cannot subscribe to it directly. A feeder preserves the master. It does not simplify it, and it does not reduce what has to be run.
If the populations need different assets, different borrowing, different timing or different economics, the feeders are pretending, and the pretence surfaces at the first allocation nobody can explain. The honest structure is parallel vehicles or two funds, sold as two funds.
A wrapper interposed to reach a position the master does not hold has been asked to do tax work. What a particular entity may claim, on a particular income type, under a particular treaty, turns on the specific facts and belongs to tax counsel. A structure paper that assumes the answer has assumed the most expensive thing on it.
Where the number of investors a feeder will admit approaches the holder cap of the rung it stands on, the cap is a rule and the commercial plan is not. Where a rung caps holders, the figure is fixed by rule, and the rule is the first thing to establish.
A feeder is the right answer to a wrapper problem. It is an expensive wrong answer to every other kind.
05 · The binding constraints
What binds, and where
Eight constraints bind this topology, and each surfaces at a different table.
Each is named to what creates it: a rule where a rule creates it, a document where only a document does. The distinction decides which of them can be negotiated and which of them can only be planned around.
- A feeder is a fund
The tier ladder applies to the vehicle being offered, not to the portfolio behind it. Both centres run three rungs on the same logic, and each writes its own rulebook, so a second feeder inherits neither the first feeder's document standard nor its holder cap nor its register.
Surfaces when the second feeder's offer document is drafted and the content standard turns out not to match the first.
- Domicile is settled per vehicle
The three consequences of domicile are drawn at vehicles and legal form. What matters here is the count: in this topology the question has as many answers as there are vehicles, and no single answer covers the arrangement.
Surfaces at the first dispute, or at an institutional investor's legal diligence, whichever comes first.
- The foreign master with a licensed manager is a named category
On the DIFC's own taxonomy a fund constituted outside the Centre and managed by a firm the DFSA licenses is an External Fund. Two bodies of law meet inside one arrangement: the vehicle answers to the law of its own home, the manager answers to the regulator for how it runs it. The gap between the two is real, and an investor who assumes both is protected by neither inside it.
Surfaces at notification or authorisation, and again whenever an investor asks what protects it.
- A seated feeder does not seat the master
A permission that reaches the offer reaches the offer and the offeror. It does not transplant the fund. The constitution, the duties of the people who run it, and what becomes of its property if things go badly remain matters for the law of its home.
Surfaces when an investor assumes the centre's courts construe the master's constitution.
- A marketing permission belongs to a fund and to its manager
Where a dedicated registration exists it attaches to a named fund and a named manager. It is not a travelling permission passing to whoever carries the document, and no permission is granted to a topology.
Surfaces when the seated feeder is offered as the reason the master may be marketed.
- Equalisation is a document term
Feeders admit on their own calendars, the master deals on its own dates, and the mechanic allocating gains, losses and costs already accrued between an earlier and a later subscriber is written into the documents or it does not exist. It is one of the two constraints on this list that no rule creates.
Surfaces at the second close, when the first close's portfolio has already moved.
- Oversight and custody sit where the assets are
At the public rung the regime puts independent oversight between the manager and the assets, and in the DIFC an eligible custodian with it. The requirement lightens as the audience narrows. A feeder holds one asset, so what its own rung requires of a vehicle with nothing to custody is a question for the rung, asked separately of each feeder rather than answered once for the arrangement.
Surfaces at document review, when a feeder's oversight obligation is found to have almost no object.
- Financing reaches only what the borrower can pledge
A facility at feeder level is secured on that feeder's own commitments. A facility at master level needs the feeders' commitments to be reachable through the chain, and whether a feeder may grant what a lender has asked for is answered by that feeder's constitution and by nothing above it. Read with fund and asset financing.
Surfaces at first credit approval, and it is the item that moves a closing date.
Six of the eight are made by a rule and two by a document. Only the two can be negotiated, and both of them are drafted last.
06 · Where it breaks
The failure points
Five failures repeat, and the first of them is a reading error.
Every one of them is found in front of a committee, a lender or a regulator. Every one of them is visible on the stack before a document is opened.
- 01 The wrong document is diligenced The feeder is called the fund throughout the marketing and the investor diligences the master. Transfer restrictions, redemption terms, forum and consent thresholds are then read out of a document that does not govern the holder reading it. The correction is made in front of an investment committee, which is what makes it expensive.
- 02 The up leg leaks A crossing between the master and one feeder is treated in a way nobody priced. The loss is suffered at the vehicle and cannot be reclaimed by the holders behind it. What each crossing attracts is tax counsel's answer on the specific facts. Drawing the leg so the question reaches the right adviser about the right crossing is the structural half of it, and it is the half that is usually missing.
- 03 The bundle disagrees with itself on forum Subscription documents carry one forum provision, the management agreement another, a side letter a third, and any arbitration wording sits across all of them. They do not always agree. Ask for every forum provision in the bundle on one page. In a master and feeder that is two or three constitutions rather than one. It takes an afternoon. Almost nobody does it.
- 04 A holder cap is reached through an aggregator Where a rung caps holders, it caps them by rule. Whether a nominee, a platform or a feeder counts as one holder of the master, or is looked through to the investors behind it, is a question for the rules of the rung in question, and it has a commercial answer attached to it: it decides how many investors that feeder can ever admit. Establish it before the second close is dated rather than after.
- 05 The master's lender asks for support a feeder cannot give Guarantees, comfort, or security over a feeder's own commitments that the feeder's constitution does not permit it to grant. Found at credit committee, after the term sheet has been signed and circulated, and answered by amending a constitution or by resizing the facility.
The accented step is the first, and it is the cheapest of the five to remove. Name each vehicle by its own name in every document that describes it.
07 · ADGM and the DIFC
The two centres
Each centre words the domicile question differently. Both ask it once per vehicle.
The DIFC sorts funds by where they were constituted and by who manages them, and ADGM puts the same axis as a single question. A master and feeder answers it once per vehicle, three times over, and the three answers do not match.
The DIFC · the taxonomy
Domestic, External, Foreign. A Domestic Fund is constituted in the Centre and entered on the regulator's register. An External Fund is constituted outside it and managed by a firm the DFSA licenses. A Foreign Fund is constituted outside and managed from outside, and it can still be offered to a reader in the Centre, arriving through the rules governing that offer rather than by belonging to the tree.
ADGM · the question
Is this fund seated here, or only offered here. A fund seated in the zone is constituted under the zone's law and its operator answers to the regulator for how the vehicle is run. A fund seated elsewhere keeps its home and acquires permission to be put in front of a reader inside. What that permission reaches is the offer and the offeror, and it does not transplant the fund.
| The question, asked once per vehicle | Feeder A, seated in a centre | Feeder B, constituted elsewhere | The master |
|---|---|---|---|
| First, the tier | Fixed when this feeder is formed, and it fixes what this population is shown: a prospectus standard, an information memorandum standard, or a rung whose entry is conditioned on a minimum subscription the rules set. | Fixed under the rules of its own home, on its own ladder, and nothing about the first feeder's rung travels to it. | Not what either population is being offered. Its own standing answers a different question and supplies neither feeder's document standard. |
| Then, the domicile | Constituted in the Centre, entered on the register, read under the Centre's law and construed by the Centre's court. On the taxonomy that is the Domestic description. | Constituted under the law of its own home, read under that law and construed by that law's court. What the Centre's taxonomy makes of it turns on who manages it and on whether it is offered here, and that is asked of this vehicle rather than inherited from the one beside it. | Constituted outside the Centre and managed by a firm the Centre licenses. On the taxonomy that is the External description, and it is the category a foreign master with a seated manager falls into. |
| Then, whose regulator sees this paper | A registration an authority granted, a notification it merely received, or neither. Which of the three is a fact about this vehicle, stated in this vehicle's own documents. | The same three answers, given by a different authority under a different rulebook. The answer here is not evidence of the answer there. | Ask it a third time. A regulator that sees the manager does not thereby see the vehicle, and an investor who has read the manager's regulation has read the manager's regulation. |
Where the reading stops · August 2026
Onshore in the United Arab Emirates and the two centres are separate regulatory territories. On this site's reading, promotion of a foreign fund to retail investors onshore is prohibited, and promotion to professional investors runs on a private placement basis, through a person the federal securities regulator licenses or an offering registered with it. Whether a given approach falls inside that perimeter is a question for counsel admitted there.
Funds domiciled in either centre have a dedicated streamlined registration for onshore marketing, and it belongs to the fund and to its manager. Whether it reaches a feeder domiciled in a centre whose master is constituted outside it is a question we surface and put to the primary text.
08 · Where our part ends
The line
The stack can be drawn in advance. What each crossing attracts cannot.
The topology, the rung of each vehicle, the domicile of each vehicle and the seam between them are structural, and they are settled before a document is drafted. Five sets of hands take it from there.
The treatment of every crossing on the distribution leg, for every investor population, in every year, and whether any particular entity may claim any particular position on any particular income type. This page draws the crossings so the question is asked about the right one.
The constitutional documents of the master and of each feeder, the consistency of the terms between them, the offer document at each rung, and liability for what it says and for what it omits.
The equalisation mechanic and its computation, feeder by feeder, on dates the master did not choose, and the allocation of costs already accrued between subscribers admitted in different quarters.
What may lawfully be communicated, to whom, in each country the offer will be made in, and on which of the two perimeters separated at co-investment each communication sits.
The financing documents, and whether each vehicle in the chain may grant what has been asked of it.
The stack drawn, the seam named, each constraint attached to the instrument or the document that creates it, every route rejected with the constraint that removed it, the open question stated rather than answered, and every forum provision in the bundle on one page before signature.
One portfolio is drawn once. The funds around it are drawn once each, and the count is the thing a structure paper gets wrong.
Read at the Collective Investment Law and Rules and Schedule 1 to the Financial Services and Markets Regulations 2015 · August 2026