SEC Approves U.S. Master Fund/Foreign Feeder Fund Arrangement – Section 12(d)(1)(E)

On March 8, 2017, the SEC staff issued a no-action letter (the "Letter") providing assurance with respect to a plan for foreign-regulated investment companies ("Foreign Feeder Fund") to invest exclusively in corresponding SEC-registered open-end master funds ("U.S. Master Fund"). The no-action assurance was conditioned upon compliance with the requirements of Section 12(d)(1)(E) of the 1940 Act, as modified by the Letter.

According to the Letter's applicant (the "Applicant"), the Letter will assist global investment managers that seek to offer an investment product across multiple foreign jurisdictions using the proposed master-feeder structure (the "Proposed Structure").

Need for the Letter. Sections 12(d)(1)(A) and (B) of the 1940 Act limit investments by investment companies, including Foreign Feeder Funds, in U.S.-registered funds.¹ These investment limitations were incorporated into the 1940 Act due to concerns about undue influence that an acquiring fund