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Our niche fund of funds are typically designed to fill portfolio gaps where time and attention may be difficult for institutional investors and offer exposure to developing areas of private equity. We believe niche fund of funds may help institutional investors enhance returns while mitigating some of the risk of these new or specialized areas.
We structure our niche fund of funds in the same manner as our overall client private equity portfolios. We aim to develop a portfolio strategy to the selected niche area across a well-diversified group of managers, geographic locations, stages and financial structures. We typically apply the program over several years to provide for vintage year diversification and the most qualified partners.
In addition, we often structure our niche fund of funds with the ability to co-invest alongside the specialist managers and take advantage of secondary investment opportunities. We believe access to co-investments and sourcing appropriately priced secondary portfolios of investments (secondaries) have the ability to improve the overall return of the fund of funds. With reduced or no fees usually paid to the specialist manager for a co-investment, co-investments can add exposure to attractive investments while reducing the overall cost of the fund of funds. Secondary fund investments can reduce the time that it takes for the fund of funds to reach its investment target since investments in secondaries typically involve buying an already mature portfolio of assets.
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