Not all private‑markets exposure is created equal. Traditional funds, club deals, and co‑investments offer very different levels of control, concentration, and fee drag. This guide unpacks the mechanics, trade‑offs, and when each route tends to make sense.

Clear definitions

1) Fund (blind‑pool fund)

A pooled investment vehicle where investors commit capital upfront to a manager (GP), who then decides over time which deals to execute within a defined strategy and mandate.

  • Capital is drawn over several years into a portfolio of assets.

  • Investors have limited say on individual deals, but benefit from diversification and a repeatable process.

2) Club deal (direct / deal‑by‑deal syndicate)

A single‑asset (or small basket) transaction where several investors pool capital—often through a dedicated SPV—to invest directly into a defined company, property, or project, usually alongside a lead sponsor.

  • Investors know the specific asset, terms, leverage, and partners at entry.

  • Governance, economics, and information rights are negotiated per deal.

3) Co‑investment (sidecar to a fund)

A direct investment into a specific deal led by a GP’s main fund, offered to selected LPs alongside that fund, typically on lower or no management fees and/or carry.

  • The GP originates and underwrites via the main fund; LPs take extra exposure to a chosen asset.

  • Often allocated to large or strategic LPs as part of the overall relationship.

Pros & cons

1) Fund (blind‑pool)

Pros Cons

  • Diversification across many assets, vintages, and sectors.

  • Fully delegated sourcing, underwriting, and portfolio management.

  • Operational scale (teams, systems, reporting) already in place.

  • Limited control over individual deals or pacing.

  • Higher fee stack (management fee + full carry on the whole portfolio).

  • Less transparency on underlying decision‑making and governance.
Best suited when

  • Building a core private‑markets program from scratch.

  • Lacking internal resources to evaluate and monitor single assets.

  • Prioritising diversification and manager selection over direct control.

2) Club Deal

Pros Cons

  • Full asset‑level transparency at entry (business plan, capital structure, governance).

  • Ability to negotiate terms, fees, governance rights, and information directly.

  • Potentially lower all‑in fees relative to fund structures if well negotiated.

  • High concentration risk (single or few assets).

  • Higher burden on your team for sourcing, diligence, and monitoring.

  • Execution risk if the lead sponsor lacks proven capabilities.
Best suited when

  • You or your family office have strong domain expertise (e.g., logistics real estate, mid‑market buyouts, digital infra).

  • You want board‑level influence and direct alignment with entrepreneurs and operators.

  • You are comfortable underwriting single‑asset risk for outsized upside or strategic fit.

3) Co-invest

Pros Cons

  • Access to specific high‑conviction deals sourced and diligenced by a GP you already know.

  • Typically reduced or no management fee and/or carry on the co‑invest sleeve.

  • Ability to tilt your exposure within a fund’s portfolio towards preferred sectors or assets.

  • Deal selection and timing are often GP‑driven; windows can be short.

  • Can create unintended concentration if not coordinated with your broader portfolio.

  • Co‑invest allocations may be competitive and relationship‑driven.
Best suited when

  • You already back a GP whose strategy and process you trust.

  • You want to lower your blended fee load on a fund relationship.

  • You can move quickly on incremental diligence and IC approvals.

Concrete use cases

  • New family office building a private‑markets program
    Starts with 2–3 high‑quality diversified funds (PE, real estate, credit), then gradually layers co‑investments with those managers before exploring niche club deals where the family has operating expertise.

  • Sector‑expert family office
    Former industrial owner now focuses on mid‑market industrial buyouts. Uses club deals to lead or anchor transactions where they can add value, and selectively co‑invests alongside a few specialist funds to broaden reach.

  • Institutional LP / SWF
    Maintains a large core fund portfolio to ensure deployment and diversification, while running a dedicated co‑investment program to scale exposure to the best deals and reduce net fees. Club deals used only in a few strategic JV or infra situations.

Comparison table

Feature Fund Club Deal Co‑Invest
Exposure Portfolio of many assets Single / few assets Single asset within a fund
Control over deal selection Low High Medium (within GP pipeline)
Diversification High Low Low–Medium (deal‑by‑deal)
Fee level (all‑in) Highest Negotiable, often lower Typically lowest per unit of exposure
Governance influence Indirect (via GP) Direct (board, vetoes, info rights) Indirect (via GP), sometimes enhanced rights
Resource requirement (internal team) Lowest Highest Medium
Speed to deploy Moderate (vintage pacing) Variable (deal‑dependent) Often fast once relationship exists
Typical users FOs new to privates, pensions, SWFs, insurers Experienced FOs, SFOs, strategic investors Large LPs, FOs with strong GP relationships

When to use which: quick decision lens

  • Choose a Fund if
    You prioritise diversification, have limited internal bandwidth, and prefer manager selection and governance at the fund level over single‑asset calls.

  • Choose a Club Deal if
    You have conviction and expertise in a sector, want direct influence over strategy and governance, and are prepared to do serious work on underwriting and monitoring.

  • Choose a Co‑Invest if
    You already like the GP and fund, want more of a specific theme or asset, and are aiming to improve net returns by lowering the fee load on incremental exposure.