Fund Structure
Fund structure is the legal, economic, and operational design of a fund, including its vehicle type, governance terms, liquidity, and fee/carry mechanics.
Allocator relevance: Structure determines control, liquidity risk, reporting expectations, and economics—allocators often say “no” based on structure before discussing performance.
Expanded Definition
Fund structure includes whether the vehicle is closed-end or evergreen, whether it uses feeders or parallel funds, how capital is called or subscribed, and how distributions are made (waterfall mechanics). It also includes investor rights: reporting, governance, side letters, redemption terms, and LPAC involvement.
In private markets, structure is how strategy becomes investable. Two managers can run similar strategies, but structure can change the risk profile materially.
Decision Authority & Governance
Structure is governed by legal documents (LPA/PPM) and operational providers (administrator, custodian). Allocators evaluate governance protections: conflicts policy, valuation policy, key person terms, and control rights during extensions or continuation events.
Common Misconceptions
- Structure is “legal detail” separate from returns.
- A standard LPA means standard governance outcomes.
- Side letters don’t materially change structure.
Key Takeaways
- Structure shapes risk, liquidity, and control.
- Governance protections are part of structure.
- Compare structure across peer funds before underwriting narratives.