Definition of 'Feeder Fund'
Feeder funds can be either open-ended or closed-ended. Open-ended feeder funds continuously issue and redeem shares, while closed-ended feeder funds have a fixed number of shares that are traded on an exchange.
Feeder funds typically charge a management fee, which is a percentage of the fund's assets under management. The management fee is paid to the feeder fund's investment manager, who is responsible for making investment decisions on behalf of the fund's investors.
Feeder funds can be a good way for investors to access specialized investments that may not be available directly through the underlying fund. However, it is important to be aware of the fees associated with feeder funds before investing.
Here are some additional things to keep in mind when considering investing in a feeder fund:
* The underlying fund's investment strategy may not be suitable for all investors.
* Feeder funds can be subject to the same risks as the underlying fund, as well as additional risks, such as the risk of the feeder fund's manager making poor investment decisions.
* Feeder funds may have higher fees than the underlying fund.
If you are considering investing in a feeder fund, it is important to do your research and understand the risks involved before making a decision.
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