How to set up a wholesale fund in Australia: a step-by-step guide

Launching a wholesale fund in Australia is one of the most rewarding things a fund manager can do, and also one of the more involved. There is no single template because the right structure depends on what you are investing in, who is investing with you, and how you plan to charge fees. Get those decisions right at the start and the rest of the build flows naturally.

This guide walks through the decisions and documents involved in setting up a wholesale fund in Australia, in the order we typically work through them with new clients.

Step 1: Start with the asset class

Every fund decision flows from what you are investing in. Before you talk to lawyers, get clear on the asset itself. Key questions: What are its cash flow characteristics? Will you call capital upfront or progressively? Will the fund pay distributions, and how often? How liquid is the underlying asset?

Step 2: Understand what capital wants

The second decision is who you are raising from, and what those investors expect. Consider investor type (HNW, family office, institutional), income vs growth preference, investment horizon, redemption expectations, minimum ticket size, and reporting expectations.

Step 3: Choose your fund structure

Australian wholesale funds are typically established as unit trusts operating as unregistered managed investment schemes. Key structural decisions: open-ended or closed-ended, single fund or master-feeder structure, and tax positioning (MIT/AMIT eligibility).

Step 4: Define your business model

Typical wholesale fund fee structures include management fees (1%–2% of FUM), performance fees above a hurdle rate, establishment fees, and transaction or arrangement fees. Fees must support a viable business after paying trustee, administrator, auditor, legal advisers and staff.

Step 5: Determine your licensing pathway

Operating a wholesale fund requires authorisation under an Australian Financial Services Licence. Most first-time managers launch as a Corporate Authorised Representative (CAR) of an existing licensee — far faster and cheaper than applying for their own AFSL, which takes six to twelve months.

Step 6: Assemble your service providers

A wholesale fund needs a specialist funds lawyer, tax adviser, trustee, fund administrator, auditor, insurance, and technology. Choosing the right combination is where many first-time managers benefit most from an experienced partner.

Step 7: Build the documents

Core documents include the Trust Deed, Information Memorandum (IM), Investment Management Agreement (IMA), CAR Agreement, subscription documents and AML/KYC pack, and compliance policies. Done properly, these take three to four weeks from engagement to launch-ready.

Step 8: Launch, onboard, operate

With documents executed, the fund can accept subscriptions. Work shifts to investor onboarding, capital calls, asset acquisition, NAV calculations, investor reporting, distribution payments, ongoing compliance monitoring, and annual audit and tax return.

How long does it take?

For a well-prepared client with commercial decisions made and a lawyer engaged, a wholesale fund can be set up in approximately four weeks.

Working with FundPro

FundPro is an independent provider of licensing, trustee and fund administration services to investment managers across private credit, property, venture capital, private equity and other unlisted asset classes in Australia. Our directors James Watson and Jonathan Raymond personally manage each engagement. Get in touch at info@fundpro.com.au.

This article provides general information only and does not constitute legal, tax or financial advice.