A typical setup has an onshore feeder for domestic taxable investors and an offshore feeder for foreign and tax-exempt investors, both owning interests in one master fund. The master trades once, so all feeders get identical gross performance.
The design solves a tax problem rather than an investment one. Different investor types face very different treatment of the same income, and separating them into feeders lets each be structured appropriately without running two portfolios.
Costs and reporting differ by feeder, so net returns diverge. When comparing a manager's track record, confirm which feeder produced the figures and what that feeder's own fee and tax profile is. See limited-partnership and fund-of-funds.
Related: limited-partnership, hedge-fund, fund-of-funds, withholding-tax-drag, accredited-investor, prime-broker