What is the primary purpose of a Feeder Fund?

A Feeder Fund primarily functions by investing in other pooled investment vehicles, particularly offshore TARGET funds or similar investment funds. This structure allows the feeder fund to provide investors exposure to a wider array of investment opportunities managed by established funds, often located in international markets.

By doing this, a Feeder Fund aims to capitalize on the investment strategies and expertise of the underlying funds it invests in, which are typically well-managed and diversified. This approach can benefit investors who may not have direct access to these funds or who would prefer to participate in a structured investment vehicle that manages the complexities involved with international investing.

In the context of the other options provided, investing directly in equities (the first choice) would not be the primary function of a Feeder Fund as it would rather channel investments into other funds than directly manage individual equities. The option related to providing diversification in a single asset focuses too narrowly on asset class concentration rather than the broader scope of investment opportunities a Feeder Fund provides. Lastly, the option suggesting fixed interest returns does not align with the dynamic investment strategy of a Feeder Fund, which primarily seeks capital appreciation through varied investment strategies rather than providing guaranteed fixed returns.