Why Invest in Indirect Private Equity?

Investing in a private equity fund-of-funds provides investors with the potential to achieve the high returns associated with private equity while limiting, to some extent, the risks associated with the asset class. The protection against risk may be achieved by diversifying investments among a variety of portfolio funds. Funds-of-Funds offer diversification through various styles of investing, geographic area, industry and stages of company development. The amount of diversification provided by a portfolio of funds is not usually achievable through an investment in any one fund. The high minimum investment required by many top quartile funds, typically between $5 million and $25 million, makes it difficult for many investors to commit to a diverse group of portfolio funds on their own. Therefore, investments by a manager with access to a number of top quartile private equity funds can provide a favorable risk/return profile for many investors.