Master Feeder Fund Using VCC

Professional Fund Management Services

Master Feeder Fund Using VCC

In the world of investment, flexibility is key. The Monetary Authority of Singapore (MAS) recognized this and introduced the Variable Capital Company (VCC) framework, designed to serve as a collective investment vehicle. VCC requires only one shareholder with no restriction against a VCC holding a single asset. This newfound flexibility opens up a world of possibilities for VCCs, making them ideal candidates for use as master funds or feeder funds.

One VCC, Many Possibilities

VCC can be stand alone, holding a single asset or a diverse portfolio. This versatility enables the VCC to serve as a master fund, capable of accepting investments from one or more feeder funds or even functioning as a feeder fund itself.

Operational Advantages

Beyond its structural flexibility, VCCs offer operational advantages that make them particularly attractive as master pooling vehicles. These advantages include the ability to redeem capital at net asset value and the option to make distributions from assets rather than solely from profits. This streamlined approach simplifies the return of capital and investment gains to investors, a notable contrast to the more cumbersome procedures associated with ordinary Singaporean companies.

Diagramming Investment Flows

To better illustrate the versatility of VCCs in fund structures, consider the following scenarios:

1. US Tax-Resident Investors: A VCC can act as a feeder fund compliant with FATCA for US tax-resident investors looking to invest in a VCC master fund.

2. European Investors: To cater to European investors, a European feeder fund compliant with the European Union Alternative Investment Fund Managers Directive (AIFMD) can be established to funnel investments into the VCC master fund.

3. Limited Partnership Structures: In response to investor familiarity with limited partnership structures, a limited partnership feeder fund, whether offshore or in Singapore, can be created to invest in the VCC master fund.

Umbrella Structures for Asset Segregation

VCCs have the unique ability to adopt umbrella structures housing multiple sub-funds. Each sub-fund enjoys legal segregation of assets and liabilities, even within a single legal entity. This feature is invaluable for fund managers who can pool investors based on objectives and allocate funds across different asset classes.

Enhanced Liquidity Management

VCCs facilitate open-ended structures, allowing capital to be easily redeemed at net asset value. This feature empowers fund managers to carefully manage redemptions and reallocations, ensuring optimal liquidity for investors.

Tailored Wealth Management Solutions

For licensed banks and insurance companies, managing VCCs is an attractive proposition. Private banks can efficiently manage the assets and investments of high-net-worth clients, while insurance companies can adopt diversified portfolio investment strategies.

Singapore VCC is not just an investment vehicle; it’s a chameleon, adapting to various structures and investor needs. Whether it’s serving as a master fund, feeder fund, or offering multiple sub-funds, the VCC’s versatility empowers investors and fund managers alike. It’s a testament to Singapore’s commitment to fostering innovation and flexibility in the world of finance.

If you would like to consider setting up a master feeder fund structure or you need help in designing the fund structure, feel free to reach out to us:

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