Co-investment
Capital placed directly into a specific deal alongside a fund the investor already backs, usually at reduced or no fees. Cheaper than the fund, but the investor must be able to assess the deal itself, and quickly.
Where you will meet it
Co-investment appears in 6 learning outcomes on the CFA syllabus. A few of them:
- Outline the ways an investor can gain access to alternative investments
“A co-investment places additional capital alongside the fund into a specific deal, usually at reduced or zero fees, and gives the investor a look at the underlying asset — but requires the staff to evaluate it quickly.”
- Explain the ways of investing privately and the vehicles used, and when each one suits an investor
“The trap: co-investment offers often need quick decisions and may suffer adverse selection.”
- Explain what sets ultra-high-net-worth clients apart from other private wealth clients
“They demand privacy and security, access to direct and co-investment opportunities, and institutional-quality reporting, and they have the bargaining power to negotiate fees.”
- Discuss the features that institutional investors typically share
“They usually manage large pools of assets, which brings economies of scale and access to private markets and co-investments.”
Practise it
Practise co-investment until it is automatic: questions that explain every wrong option.
Take the free diagnostic →