DEFINITION of 'Captive Fund'
A fund that provides investment services solely to the one firm holding ownership. A captive fund can also refer to a type of fund where most of the capital is provided by the shareholders and management of its parent company. The fund exists solely to provide investment management services to one particular group of investors.
BREAKING DOWN 'Captive Fund'
A captive fund is funded entirely by one institution or the clients of an institution holding ownership. Institutions that hold captive funds include investment banks, insurance companies and institutional asset managers.