In practice, umbrella trust is mostly used in the field of securities investment, and each trust unit will be designed into a hierarchical structure (priority fund and inferior fund), from which the unique characteristics of umbrella trust products are derived.
In terms of structural design, a private equity institution (which can also be a natural person, or in most cases a private equity institution) is a secondary trust unit by introducing priority funds. All the funds of the sub-trust are operated by inferior investors, and the sub-trust also has systems such as early warning line and stop loss line.
Sub-trust is essentially a small sunshine private placement (that is, structured trust), while umbrella trust changes the original sunshine private placement of one account into "one-to-many", and multiple private placement institutions jointly bear the "channel fee" of a securities account, thus greatly weakening the impact of the suspension policy.
Because the disadvantages are mainly aimed at small and medium-sized private placements and powerful natural persons, umbrella trusts have long been characterized by low threshold, relatively low leverage ratio and flexible term.