Captive Fund Law and Legal Definition

Captive fund is a fund that provides investment services exclusively to the one firm holding ownership. It may refer to a private equity or a venture capital firm owned by a big financial institution. For example, venture capital firms owned by private commercial banks.

Captive fund can also refer to a fund where most of the capital is contributed by the shareholders and management of its parent company. Captive funds make investment exclusively on behalf of the parent company. A captive fund exists solely to provide investment management services to one particular group of investors.