Investor Appetite for Fund of Funds Vehicles over the Coming Year

Date: Wednesday, May 29, 2013
Author: Preqin

Investors look to invest in funds of funds for a number of reasons, such as portfolio diversification and access to top-tier fund managers. Preqins Investor Intelligence currently tracks over 5,000 active investors in private equity funds, of which over a quarter (26%) have previously invested in a fund of funds vehicle. Over the coming year, 18% of investors that are planning on making new private equity fund commitments have stated a preference for fund of funds vehicles.

Of the LPs seeking to invest in funds of funds over the coming year, the majority (61%) are based in North America, with an additional 30% located in Europe and the remaining 9% based in Asia and Rest of World countries, including Japan, China and Australia.

With regards to investor types, public pension funds represent the largest proportion (33%) of LPs planning to invest in fund of funds vehicles over the coming year, with private sector pension funds accounting for an additional 14%. Foundations represent 18% of LPs looking to commit to funds of funds over the next 12 months. Other investor types include endowment plans, insurance companies, asset managers and banks.

As a whole, a variety of investors around the world plan to commit further capital to fund of funds vehicles over the coming 12 months, demonstrating this strategy remains attractive to investors.