Small-angle neutron scattering and mean-field lattice modeling were used to characterize a class of water-based magnetic fluids tailored specifically to extract soluble organic compounds from water. The fluids consist of a suspension of similar to7 nm magnetite (Fe3O4) nanoparticles coated with a bifunctional polymer layer comprised of an outer hydrophilic poly(ethylene oxide) (PEO) region for colloidal stability and an inner hydrophobic poly(propylene oxide) (PPO) region for solubilization of organic compounds. The inner region of the polymer shell is increasingly depleted of water as the fraction of PPO side chains increases. The incorporation of PPO side chains also leads to a small increase in interparticle attraction. The lattice model predicted a shell structure similar to that of a PEO-PPO-PEO triblock copolymer (Pluronic) micelle, with equivalent levels of hydration but with more PEO present in the PPO-rich regions, as the side chains grafted to the surface are less able to segregate than when in free micellar systems.