What is a Feeder Fund?

Ropa Ushe
July 4, 2025

A feeder fund (“Feeder”) is an investment vehicle—typically a limited partnership—that aggregates investor capital and channels it into a central “master” fund (“Master”), which manages and executes the overall investment strategy. This Master/Feeder structure is commonly used by private equity and hedge funds to streamline capital pooling. Profits generated by the Master are generally distributed to Feeders on a pro rata basis, based on their respective contributions.

The Feeder operates as a distinct legal entity from the Master, which is an important consideration for both fund managers and lenders—especially when structuring subscription-backed credit facilities (“Facilities”). Investment managers create Feeders to accommodate varying investor needs, including differences in tax treatment, ERISA considerations, minimum investment thresholds, fee arrangements, and other administrative preferences.

Ropa Ushe

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