Umbrella fund structures are a form of investment fund that makes it possible to combine several individual funds under one umbrella. The difference between an umbrella fund and a fund of funds is that the sub-funds of an umbrella fund are always managed by the same investment company.
Summary of umbrella funds
Diversity of funds
An umbrella fund consists of several sub-funds (also known as sub-funds or segments), each of which may have different investment strategies, assets or investment objectives.
All sub-funds within an umbrella fund are managed by the same fund management company. This allows for efficient management and use of resources.
Separate legal entities
Each sub-fund of an umbrella fund is a separate legal entity, which means that losses or gains of one sub-fund are not transferred to others.
Pooling of resources and joint management can reduce costs and take advantage of economies of scale.
Advantages of umbrella funds
Investors can invest in different investment strategies and assets by acquiring units in different sub-funds of the same umbrella fund. This enables a broader spread of risk.
Efficiency and flexibility
The structure allows fund managers to change investment portfolios or create new sub-funds to adapt to market conditions or investor needs without having to set up a separate fund.
For investors, administration can be made easier as they can hold different investment strategies within a single fund, which can mean less administrative work.
By sharing resources and managing multiple sub-funds under one umbrella, costs can be reduced, potentially leading to lower fees for investors.
Depending on tax law, umbrella fund structures may offer certain tax advantages, particularly in relation to the taxation of capital gains.
Umbrella fund structures offer an attractive way for asset managers to implement their investment strategy quickly and flexibly, while benefiting from efficiency and strong cost advantages.