Aligning Interests: The Emergence of Hedge Fund Co-Investment Vehicles (J.P. Morgan)

May 2014

KEYWORDS: co-investment, strategy, alignment of interests, asset allocation, redemption terms, Liquidity, fees, management fee, performance fee, limited partners, Private Equity, Fund of Funds, North American, European, execution, transparency, due diligence, NAV, credit

Authors:

Alessandra Tocco; Kenny King, CFA; Christopher M. Evans

Organizations:
  • J.P. Morgan

Summary:

In this edition of Prime Brokerage Perspectives, we examine the growing prevalence of hedge fund co-investment vehicles along with their applicable terms, structures and the strategies for which they are being used most frequently. The purpose of this Perspectives’ piece is to provide an overview of hedge fund co-investment structures for managers interested in launching such vehicles and for institutional allocators considering them for investment. In doing so, this report seeks to identify common features of, and trends among, hedge fund coinvestments in order to provide managers and investors with a cohesive organizational framework that they can use to assess co-investment opportunities. This report also explores the incentives for managers to bring such structures to market and for institutional allocators to invest in them.

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