Cambridge Associates: Making the Case for Co-Investments

NEW YORK - March 30, 2016 - PRLog -- Andrea Auerbach, Head of Global Private Investment Research for Cambridge Associates, joined Asset TV to help explain co-investments and the potential benefits they can provide to investors.   As Andrea explained, co-investments are primarily passive direct investments into a private security offered by general partners who may not have enough capital in their own fund to house the entire investment on their own.   With co-investments, individuals would reach out to an LP (limited partnership) or other institutional investors to offer them the ability to invest alongside the fund.

This practice has allowed for greater access to investments that ordinarily some investors would not have been able to have, thusly taking advantage of the greater benefits of those investments.  One of the main benefits are, in fact, the larger returns that are possible.  As Andrea explained, "By pursuing co-investments, it's a way for investors to selectively make direct equity investments, or direct private credit investments, alongside gp's and therefore increase the return potential of their private equity program."  Co-investments also occur at a lower fee rate.  So investors can benefit from a reduction in the cost of access to the asset class, thus giving themselves the potential to earn a greater return.

Co-investments can also offer investors greater control over their portfolio construction.  "Investors are able to select what specific geography of co-investment they may want to add to their program, what type of strategy they want to include in their private program, or even a type of security," Andrea explained.

While co-investments can offer some great benefits to investors, individuals still need to do their homework.  "We think investors should take that time now to consider their position on co-investments.  Know why you're doing it, put your proper policies and processes in place, and if you're not going to pursue co-investments, understand why you're not pursuing it and be clear about that."

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