what is a hub and spoke structure 
hub and spoke structures are used by investment companies to pool assets cut costs and improve efficiency several investment vehicles each remaining individually managed combine their assets and contributing to one central vehicle this can also be called a master feeder structure all of the funds in the system typically have the same investment objective and portfolio manager or master fund that serves as the hub the smaller investment vehicles or feeder funds are referred to as the spokes understanding a hub and spoke structurea hub and spoke provides benefits to managers of investment funds by offering numerous efficiencies from their pooled structure with a hub and spoke structure capital is channeled to the master fund where all transactions are made helping to reduce transaction costs 12hub and spoke structures can also accommodate a full range of feeder funds providing greater incentive for business development a fund can be marketed in different ways and to different investors using a multitude of spokes 2 each spoke can charge different fees and therefore appeal to a wider array of investors all the while operating as one investment portfolio these funds are able to keep fund operating costs relatively low in comparison to their competitors due to the hub and spoke structure 1in addition hub and spoke structures commonly include both u s and offshore funds creating the ability to market the fund globally these structures are set up as partnerships to service global investors as a partnership they can work cooperatively while still allowing for individual feeder fund registration in the u s and abroad 2accounting and financial reporting can be complicated in a hub and spoke fund structure with this type of fund all transactions fees and expenses are accounted for and paid from the master fund despite the complicated accounting for inflows and outflows to and from the master fund its partnership structure allows each feeder fund to be managed individually with its own rules and registrations 3this is particularly beneficial in the case of taxes offshore funds often require different taxes on dividends and capital gains in a hub and spoke structure u s investors in an onshore fund would be unaffected by any obligations of the offshore fund and vice versa 4 the hub and spoke structure keeps all fund reporting fees and expenses segregated while still allowing for the greater benefit of economies of scale 5example of a hub and spoke fundseveral hub and spoke funds exist in the market blackrock is one fund manager broadly employing this fund structure in a variety of hub and spoke setups 6for example they run the master treasury strategies institutional portfolio which is the hub consisting of two spokes the blackrock select treasury strategies institutional fund and the blackrock treasury strategies institutional fund 7 each of the feeder funds engages in a different investment strategy with a different portfolio manager 