Private equity is an illiquid asset class, with investors required to commit capital to private equity funds for ten years or more. The private equity secondaries market allows for the buying and selling of existing investor commitments to private market funds.

Secondary funds purchase these existing commitments from limited partners (LPs) seeking to exit primary private equity funds before they are fully liquidated.

What are Fund-of-funds and Secondary funds?

Private equity fund-of-funds are investment vehicles that create a private equity portfolio by investing in a range of primary private equity funds. Secondary funds are vehicles investing in a range of private equity funds on the secondary market. Through these funds, investors are exposed to a highly-diversified portfolio of indirect investments in hundreds of companies. For portfolio construction fund-of-funds typically select a certain area of the private equity spectrum in which to invest,  such as buy-out funds or venture capital funds, often complemented with a geographical focus.

What are Co-investment funds?

Private equity co-investment funds are investment vehicles that create a private equity portfolio by co-investing, alongside major private equity funds, in a range of companies.