In UITFs, which structure limits investment in a single collective investment scheme to less than 90%?

The correct response highlights the structure of a feeder fund, which is designed to invest in a master fund while maintaining a distinct separation from the primary investment vehicle. This separation is essential because the objective of a feeder fund is to pool capital from multiple investors and allocate that capital into one or more master funds without overwhelming the master fund with excessive capital from a single source.

The characteristic feature of a feeder fund is to ensure that it keeps its investment in the master fund limited to less than 90%. This is particularly crucial as it provides flexibility in fund management and diversification, allowing for better risk distribution. By not exceeding this threshold, the feeder fund can maintain a balance in its portfolio and ensure that no single investment dominates the overall strategy.

In contrast, other structures mentioned—like closed-end funds and open-end funds—function without the same investment restrictions pertaining to a master fund. Closed-end and open-end funds operate as standalone investment vehicles that do not directly invest into a singular master fund structure, therefore not requiring a cap like that imposed on feeder funds.

Additionally, a master fund, by definition, serves as the primary investment vehicle within the structure, accepting investments from various feeder funds or directly from investors, which is why it does not have the same limitations on investment