Investment Fund Structures

Alternative investment manager can launch a fund using structures such as a master-feeder structure, a side-by-side structure, along with side pockets and different share classes depending on the type and residence of the prospective investors. 

Master-Feeder

The master-feeder structure is a combined hedge fund structure in which the domestic and offshore funds feed into a single onshore/offshore master fund. The master-feeder structure allows U.S. investors to contribute to the domestic fund, while foreign investors and tax-exempt U.S. investors can participate in the offshore fund. 

Side-by-Side

Side-by-side structure is where the domestic fund and the offshore fund are incorporated to manage the fund strategy pari passu in both funds without a master fund. A side-by-side structure is used more often for fund of funds, as there is a significant amount of work involved to effect a trading strategy as well as the duplication of administration for the two funds.

If you are an emerging manager, plans to launch fund, here you can find a comprehensive guide about which jurisdiction you can use to optimize your fund launch

Knowledge Resources for Hedge Fund Managers

• Structuring a Hedge Fund (PDF)

• Ten Tips for Starting a Hedge Fund (PDF)

• Trader vs. Investor Tax Status (PDF) 

• US Hedge Fund Start-Up Guide 2022 (PDF)

The Akram Brief

Please read our blog regarding key considerations for selecting a fund structure before investment manager raises outside capital from investors.