Written by Parastu Aghai, Director · Last reviewed 24 September 2026
Working with investment funds, I regularly come across questions that sound straightforward at first, but often become much more complicated once you look at the regulatory structure.
So I am starting a short Fund Problems – Q&A Series, covering some of the practical issues that arise when establishing and operating funds in the UAE.
Q1: The master fund is already audited. Does an ADGM feeder fund really need its own auditor?
Not necessarily as straightforward as it sounds.
A feeder fund may invest substantially or entirely into a master fund, and the master fund may already prepare audited financial statements. Commercially, having another audit at feeder level can therefore appear duplicative.
However, the feeder remains a separate fund and must be assessed against the regulatory requirements applicable to its own fund category. The existence of an audited master fund does not, by itself, remove the feeder’s obligations.
The right questions are therefore: What type of fund is the feeder? What reporting and audit requirements apply to that category? And is any exemption or waiver available?
Takeaway: Never assume that compliance at master-fund level automatically satisfies the obligations of the feeder.
Q2: Can a fund manager outsource administration, valuation or custody and simply rely on the service provider?
Outsourcing the work does not necessarily mean outsourcing the responsibility.
Fund managers commonly appoint third-party administrators, custodians and other specialist service providers. That makes operational sense and, in many structures, is an essential part of the fund setup.
But the appointment of a third party does not mean that the fund manager can stop exercising oversight.
The manager should understand exactly what has been delegated, conduct appropriate due diligence on the provider, establish clear contractual responsibilities and maintain ongoing oversight.
This becomes particularly important with matters such as NAV calculations, valuation, investor records and regulatory reporting.
Takeaway: You can outsource a function. You cannot automatically outsource your regulatory accountability.
Q3: Can we start marketing the fund while we are still waiting for regulatory approval?
This is probably one of the most important questions to ask before speaking to potential investors.
Fund promoters understandably want to build an investor pipeline while the fund or manager is going through the regulatory process.
But there is a significant difference between having preliminary discussions, testing investor interest and actually marketing or offering interests in a fund.
What can be communicated — and when — depends on the regulatory status of the manager and fund, the type of investor being approached, the jurisdiction in which that investor is located and the nature of the communication itself.
And remember: having a UAE-regulated structure does not automatically give you the right to market that fund in every other jurisdiction.
Takeaway: Fund marketing should be part of the regulatory structuring discussion from day one — not something considered once the fund documents are finished.
These are exactly the kinds of issues that can turn a seemingly simple fund structure into a regulatory project.
More fund problems coming in Series 2.
