Funds of Funds and Co-Investment

Investors can reach private companies through several layers. A fund of funds selects underlying managers and may combine primary commitments, secondaries, and co-investments. A co-investment places capital directly alongside a lead manager in a particular transaction. Each approach changes the investor's costs, responsibilities, and concentration.

A fund of funds can supply selection expertise, diversification, administration, and access. Those benefits have a price. The investor pays the underlying funds' economics and the additional vehicle's fees and expenses under its terms. The relevant question is whether the service improves the expected net outcome sufficiently to justify that cost.