Master–feeder investment structure

<h2 id="tax-concerns">Tax concerns</h2>
<p>For a U.S. taxable investor, the ownership of shares in what is known as a "<a href="/facts/Passive_foreign_investment_company/WlbKRpQR">passive foreign investment company</a>" or PFIC can prove to be very tax-expensive. The offshore feeder fund almost always meets the definition of a PFIC. An (onshore) master fund does not, so the transaction is set up so that the master fund is a partnership for U.S. tax purposes, which effectively provides insulation between the US based investor and the PFIC feeder.
</p>
<h2 id="see-also">See also</h2>
<ul><li><a href="/facts/Fund_administration/yVUFHTpw">Fund administration</a></li>
<li><a href="/facts/Fund_governance/r3YgruA3">Fund governance</a></li></ul>

<h2 id="references">References</h2>

<ol>
<li id="fn:1"><p>"Master's Trust: What it is, How it Works, Types". Investopedia. Retrieved 2024-07-29. <a href="https://www.investopedia.com/terms/m/mastertrust.asp" target="_blank">https://www.investopedia.com/terms/m/mastertrust.asp</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li>
</ol>

Master–feeder investment structure open-in-new

Master–feeder investment structure