A Guide to Common Fund Structures in Private Markets

Introduction

Navigating private market investments requires a clear understanding of fund structures, legal and regulatory frameworks that govern how capital is pooled, managed, and distributed. Whether you're a high-net-worth individual, a family office, or a professional investor, selecting the right structure is key to balancing control, liability, tax efficiency, and investor eligibility.

Below, we break down the most common fund structures used in private credit, venture capital, private equity, and hedge funds.

Corporate Structures

These vehicles are incorporated entities that form the legal foundation for most alternative investment funds.

Limited Partnership (LP)

The LP is the industry standard for private equity, venture capital, and private credit. It consists of:

• A General Partner (GP) who manages the fund and assumes liability.
• Multiple Limited Partners (LPs) who provide capital but have limited liability.

Typically, LPs commit capital for a fixed term (e.g. 10 years), during which the GP sources and manages investments.

Limited Liability Company (LLC)

An LLC offers flexible governance and pass-through taxation—ideal for U.S.-based managers. While not as common as LPs for institutional funds, they are popular with family offices or bespoke investment clubs.

Société en Commandite par Actions (SCA)

A hybrid structure used in Luxembourg, blending features of a corporation and an LP. The GP has unlimited liability, while shareholders (LPs) have limited exposure. Often used for regulated private market funds in Europe.

Investment Companies (SICAV / SICAF)

Widely used in Europe, these open-ended (SICAV) or closed-ended (SICAF) entities are suitable for both institutional and semi-retail investors. Often regulated and tax-efficient.

Trust Structures

Trusts are more common in offshore and Asian jurisdictions, offering privacy, flexibility, and simplicity.

Unit Trust

Investors hold units in a trust, which is governed by a trustee. Popular in the Cayman Islands, Singapore, and Australia, unit trusts are often used for real estate and retail-accessible hedge funds.

Discretionary Trust

Primarily used for estate planning or family wealth management, these structures give trustees discretion over how income and capital are distributed to beneficiaries.

Special Purpose Vehicles (SPVs) & Investment Entities

These are not funds in themselves but are essential tools within fund architecture.

SPV (Special Purpose Vehicle)

A standalone legal entity used to isolate risk, hold assets, or ringfence a specific investment. Common in credit, real estate, and structured finance.

Feeder Fund

Collects capital from a specific investor group (e.g. U.S. taxable investors) and channels it into a master fund, enabling tax-efficient, jurisdiction-specific access.

Master Fund

The central entity in a master-feeder structure, pooling capital from multiple feeders. Investment activity occurs at the master level for efficiency.

Parallel Fund

Used to accommodate different investor types (e.g. EU vs. non-EU), while mirroring the main fund’s investments. Particularly useful for regulatory or tax reasons.

Co-Investment Vehicle

Set up to offer selected LPs the opportunity to invest directly in specific deals, outside of the main fund, often with reduced fees.

Regulated Fund Structures by Jurisdiction

For investors seeking transparency, compliance, or access to regulated capital, these vehicles are structured under specific legal regimes:

Luxembourg

• RAIF (Reserved Alternative Investment Fund) – Flexible, quick-to-market structure.
• SIF (Specialised Investment Fund) – Regulated, tax-efficient, for well-informed investors.
• SICAR – Tailored for private equity and venture capital.
• SICAV – Open-ended, regulated investment company.

Ireland

• ICAV (Irish Collective Asset-management Vehicle) – Highly flexible and tax-transparent.
• QIAIF (Qualifying Investor AIF) – For professional investors, lightly regulated.

Cayman Islands

• Exempted Limited Partnership (ELP) – Most popular for offshore private equity/credit.
• Segregated Portfolio Company (SPC) – Allows asset/risk ringfencing under one legal entity.

United Kingdom

• 1907 Limited Partnership – Legacy structure still used for many PE and VC funds.
• Investment Trusts – Closed-ended and listed, offering access to retail investors.

UAE Fund Structures

The UAE has rapidly emerged as a regional hub for asset management, offering both onshore and offshore fund domiciliation options. Funds can be established in various jurisdictions including the mainland, the Dubai International Financial Centre (DIFC), and the Abu Dhabi Global Market (ADGM), each with its own regulatory authority and legal framework.

Main UAE Fund Jurisdictions

Use Cases for UAE Funds

• Regional private credit or real estate funds raising GCC capital
• Feeder funds into offshore master structures (e.g. Cayman or Luxembourg)
• Family office vehicles seeking Middle Eastern regulatory alignment
• Islamic-compliant (Shariah) structures through certified frameworks

Why Consider UAE as a Fund Jurisdiction?

• Strategic access to GCC capital pools
• Evolving regulatory landscape with clear segmentation (retail vs. professional)
• Increasing tax treaty access and substance rules
• Growing network of double tax treaties (DTTs)

Other Hybrid and Flexible Structures

Evergreen Fund

Unlike traditional closed-end funds, evergreen funds allow continuous capital inflows and outflows, suitable for long-duration strategies like income-focused credit or infrastructure.

Closed-End Fund

Capital is committed for a fixed term (often 10+ years), with investor returns tied to liquidity events like exits or refinancings.

Fund of Funds (FoF)

Invests into a portfolio of other funds, offering diversification but typically at higher fees. Used by smaller institutions or for portfolio balancing.

Choosing the Right Structure

The optimal fund structure depends on several factors:

• Investor profile (institutional, retail, offshore/onshore)
• Asset class (credit, equity, real estate)
• Tax and regulatory considerations
• Jurisdiction of manager and investors
• Desired control and governance

Conclusion

Fund structures are not one-size-fits-all. Whether you're launching a new private credit vehicle or allocating capital as a limited partner, the structure should align with your investment goals, regulatory constraints, and investor base. A well-chosen structure supports not only legal and tax efficiency, but also operational success, transparency, and investor confidence.