Master Trust
What Is a Master Trust?
A master trust is an investment vehicle that collectively oversees pooled investments. It can allude to the primary fund where assets are pooled and collectively managed in a master-feeder structure, likewise called a hub and talked structure. Employers can utilize a master trust structure for pooling investments in an employee benefit plan.
How a Master Trust Works
A master trust is ordinarily some sort of pooled investment vehicle that allows for the management of funds contributed from numerous sources. A portfolio manager is responsible for regulating the assets in the master trust. The accounting and reporting capabilities for a master trust are generally complex. This is on the grounds that a master trust includes various investors and may incorporate numerous feeder funds.
A master trust is utilized as part of an exhaustive asset management scheme for a strategy managed with a master-feeder structure. Fundamentally, it is the master fund that collectively contributes for all the associated feeder funds. In a master-feeder structure, assets are pooled, managed, and executed from the master trust.
BlackRock, for instance, is an asset manager with a variety of master-feeder funds. Every one of the funds has a master trust where the assets are managed collectively. The investment company's Master Trust LLC strategy utilizes a master-feeder structure. The Master Trust LLC is the master fund and its feeder funds incorporate BIF Treasury Fund and BBIF Treasury Fund.
Different instances of BlackRock hub and talked funds can be found at BlackRock Master Portfolios. Overseeing and trading assets collectively from a master trust allows the company to keep fund operating costs down.
Master trusts can be utilized for dealing with a wide range of portfolios.
Overall, master trusts accommodate greater economies of scale. They allow a designated portfolio manager to deal with the assets in a collective fund, keeping management costs down. Collectively pooling assets can likewise keep transaction costs low.
Types of Master Trust
- Unit Investment Trust: A unit investment trust (UIT) may likewise be known as a type of master trust. These vehicles pool shareholder investments and commonly incorporate diversified holdings managed to a specific strategy. A unit investment trust might have a predefined duration with a foreordained maturity date.
- Employee Benefit Plan: An employee benefit plan may likewise decide to collectively oversee assets for employees in a master trust. An employer can lay out a master trust for which they and their employees collectively contribute investments. The portfolio manager deals with the assets collectively in the master trust. Companies may likewise decide to pool assets with different companies in a master trust determined with clear objectives and segregated reporting. Frequently employers utilize a master trust since it works on the method involved with overseeing employee benefits.
Features
- A portfolio manager is responsible for directing the assets in the master trust.
- A master trust is an investment vehicle that collectively oversees pooled investments.
- Frequently employers utilize a master trust since it improves on the most common way of overseeing employee benefits and keeps management costs down.
- Employers can utilize a master trust structure for pooling investments in an employee benefit plan.
