What is a private equity fund of funds?

A private equity fund of funds acts as a Limited Partner for private equity firms. It raises capital from institutional investors such as pensions, sovereign wealth funds, endowments, and high-net-worth individuals, and it invests that capital in specific PE firms.

How to invest in private equity?

There are a few non-direct ways to invest in private equity. A fund of funds holds the shares of many private partnerships that invest in private equities. It provides a way for firms to increase cost-effectiveness and reduce their minimum investment requirement.

Are private equity funds a good investment?

Even though these funds promise investors big returns, they may not be readily available for the average investor. Firms generally require a minimum investment of $200,000 or more, which means private equity is geared toward institutional investors or those who have a lot of money at their disposal.