What is a Master-KAG?
A German phrase – originally Kapitalanlagegesellschaft, translating to English as capital management company – used to describe capital management companies that only practice administration for special assets. The Master-KAG founds the special assets, is in control of the fund accounting and decides the custodian bank for holding and valuing the assets.
Where have you heard about the Master-KAG?
A master fund gives investors the opportunity to accumulate high capital volume in just one fund. This fund then consists of several sub funds. If a high net worth investor wanted to combine multiple funds into one master fund with specific managers for each sub fund they could use the Master-KAG.
What you need to know about the Master-KAG.
There are pros and cons to the master funds. Due to the making of all reports in one contained system, the client has a better advantage of comparing the performance of several different fund managers simultaneously. However, the main disadvantage seems to be the extra time, work and cost that it takes for the interfaces between the Master-KAG and the external asset managers to exchange certain information. These teams need to be up to date on the specific inventory lists of the fund, therefore extra fund accounting is needed.