co-investing

With co-investing, an investor contributes to a pool of investment funds (as with fund investing) but also has the right to invest directly alongside the fund manager in some of the assets in which the manager invests. Co-investing can reduce overall fees, while benefiting from the manager’s expertise, and provide the investor with more control over asset selection and management. Compared with fund investing, it requires greater expertise, due diligence, and involvement with asset management. Co-investment opportunities may be subject to adverse selection if fund managers choose to make the full investment through the fund for assets they are quite confident about, and offer co-investment opportunities on assets they are less confident about