Investor types

Funds of funds

A fund of funds commits its investors' capital to a portfolio of other private funds, and the largest managers now add secondaries, co-investments and separately managed accounts. Fundraising for traditional fund of funds vehicles fell to its lowest level in over a decade in 2024.

What a fund of funds is

A fund of funds is a vehicle, or a manager running such vehicles, that commits capital to other private funds rather than investing directly in companies. Its investors gain a diversified portfolio of underlying managers through a single commitment. Many fund of funds managers now also buy fund interests on the secondary market, co-invest alongside the managers they back and run separately managed accounts (SMAs) for individual large investors.²

A fund of funds differs from a single-manager private equity fund, which invests directly in companies, and from a pension fund or other limited partner that builds its own portfolio of fund commitments. It sits between the two: it is a limited partner in the underlying funds and a general partner, or manager, to its own investors, and it charges its own fees on top of those of the underlying funds.

Scale

According to PitchBook's Q1 2025 Global Private Market Fundraising Report of 23 May 2025, fund of funds vehicles raised US$35.0 billion across 112 funds in the twelve months to 31 March 2025, down 16.0%, out of US$1,256.7 billion raised by private capital funds of all types in the same period.¹ These counts exclude SMAs, so they understate the capital that fund of funds managers oversee.²

The largest managers measure their assets in the hundreds of billions of dollars. StepStone Group reported US$245.4 billion of assets under management at 30 June 2026, Partners Group US$186 billion, HarbourVest US$167.9 billion and Hamilton Lane US$146.3 billion of discretionary assets at the same date.^3,4,9,5 Europe has several large managers of its own: in Switzerland, Partners Group is based in Baar-Zug and LGT Capital Partners, with over US$110 billion of assets under management in July 2026, in Pfäffikon; in the UK, Pantheon reported US$83.8 billion of discretionary assets under management at 31 December 2025.^4,14,6

Structures and sub-types

Fund of funds managers offer several structures, often under one roof.

Primary funds of funds, which commit to new funds raised by underlying managers.
Secondaries funds, which buy existing interests in private funds from investors seeking liquidity, often at a discount to net asset value. Secondaries funds raised US$122.3 billion in the twelve months to 31 March 2025, according to PitchBook.¹
Co-investment funds, which invest directly in companies alongside the sponsors a manager backs, usually at lower fees. Co-investment funds raised US$27.2 billion in the same period.¹
Separately managed accounts, which run a dedicated portfolio for a single large investor. PitchBook reports that SMAs grew from about 15% to about 50% of Adams Street's assets over a decade.²
Evergreen and semi-liquid vehicles, which accept subscriptions and offer periodic redemptions rather than a fixed term, and are used mainly for private wealth clients.

Source of capital and investment horizon

Capital comes from pension funds, insurers and wealth clients, and larger investors increasingly use SMAs.² Smaller institutions, family offices and private bank platforms use funds of funds to obtain diversification across managers and vintage years and to outsource the administration of capital calls and reporting. The horizon follows that of the underlying funds: a closed-end primary fund of funds commits over several years and receives distributions as the underlying funds sell their companies, while evergreen vehicles have no fixed term.

How funds of funds invest in private markets

The traditional model is manager selection. A fund of funds team assesses general partners, commits to the funds it selects and monitors them over their life. The larger firms have added two further channels. In secondaries, Adams Street secured over US$5 billion of capital commitments for its latest Secondaries Investment Program, announced on 3 August 2026.⁷ In co-investment, HarbourVest closed its Co-Investment Fund VII Program with approximately US$4.75 billion of total commitments, as reported in July 2026.¹⁰ Secondary purchases of seasoned fund interests produce distributions earlier than new primary commitments, which helps to offset the early negative returns of a young fund portfolio.

The secondary market in which these managers buy reached US$162 billion of transaction volume in 2024, up 45% from US$112 billion, and a record US$240 billion in 2025, up 48%, according to Jefferies.^12,11

How decisions are made

A fund of funds research team tracks a large universe of managers through its own databases and meetings. Due diligence on a manager covers the track record, typically measured by distributions to paid-in capital, total value to paid-in capital and comparison with public market equivalents, the attribution of returns to individual deals and partners, the consistency of the strategy, references from portfolio company executives and an operational review. The team's recommendation goes to the fund of funds' investment committee for approval.

What funds of funds look for and why they decline

Funds of funds look for track records tested across a full cycle, low turnover among the senior partners, access to managers whose funds are in demand, institutional-quality reporting and, increasingly, co-investment rights alongside a primary commitment. Proposals are commonly declined where a first-time team lacks a verifiable shared history, where the strategy has drifted from previous funds, where fund size has grown faster than the team or the opportunity set and where the manager will not offer co-investment access.

Fees, regulation and governance

A fund of funds charges its own management fee and, in some cases, carried interest on top of the fees charged by the underlying funds, so its investors pay two layers of fees. Callan's 2024 Private Equity Fees and Terms Study found that fund of funds management fees averaged 0.76% during the investment period and 0.70% after it, based on 29 fund of funds partnerships.¹³ Investors weigh that cost against the access to managers, diversification and monitoring the fund of funds provides.²

Fund of funds managers are regulated as fund managers in the jurisdictions where they operate: as alternative investment fund managers in the European Union and the UK, under the Financial Institutions Act and the Collective Investment Schemes Act supervised by FINMA in Switzerland, and as registered investment advisers in the United States.

Trends in 2025 and 2026

Fundraising for traditional fund of funds vehicles has declined. According to PitchBook, 2024 was the weakest fund of funds fundraising year in over a decade, and in December 2024 the segment was on track for its lowest total in 16 years.² PitchBook's fund of funds counts exclude SMAs, and secondaries and co-investment funds are counted separately, so the headline decline does not capture all the capital these managers raise.^1,2

At the same time, the largest managers continued to grow, largely through secondaries, co-investment and SMAs. Adams Street reported approximately US$76 billion of total assets under management at 30 June 2026 in an SEC filing of 22 September 2026.⁸ Carlyle reported total assets under management of US$112 billion for its AlpInvest platform at 30 June 2026.¹⁵ Hamilton Lane reported US$1.1 trillion of assets under management and supervision at the same date, of which US$914.1 billion was non-discretionary.⁵

Notable examples

Firm	Headquarters	Size, with date
StepStone Group	New York	US$245.4 billion of assets under management, 30 June 2026³
Partners Group	Baar-Zug	US$186 billion of assets under management, 30 June 2026⁴
HarbourVest Partners	Boston	US$167.9 billion of assets under management, 30 June 2026⁹
Hamilton Lane	Conshohocken, Pennsylvania	US$146.3 billion of discretionary assets, 30 June 2026⁵
Carlyle AlpInvest	New York	US$112 billion of total assets under management, 30 June 2026¹⁵
LGT Capital Partners	Pfäffikon SZ	Over US$110 billion of assets under management, 28 July 2026¹⁴
Pantheon	London	US$83.8 billion of discretionary assets under management, 31 December 2025⁶
Adams Street Partners	Chicago	Approximately US$76 billion of total assets under management, 30 June 2026⁸

How advisers and placement agents work with funds of funds

For a fund manager raising capital, a fund of funds is both an investor and a gatekeeper: it commits on behalf of many underlying investors and runs its own due diligence on the manager, and a commitment from a well-known fund of funds can help to anchor a mid-market private equity or venture capital fund. Because fund of funds teams hold their own data on managers, an adviser presenting a fund is expected to supply detailed historical cash flows, deal-level attribution and audited portfolio valuations at the first screening. Funds of funds are also active buyers in secondary transactions and co-investments, so they appear as counterparties when an investor sells a fund interest or a sponsor syndicates part of a deal.^7,10 Anglo-Suisse Capital advises on capital raising, M&A and secondary transactions with professional investors.

Frequently asked questions

Are funds of funds shrinking?

Fundraising for traditional vehicles has fallen: PitchBook reported 2024 as the weakest year in over a decade. Much new capital now goes to SMAs, which those counts exclude.²

How much did funds of funds raise in the year to March 2025?

US$35.0 billion across 112 funds in the twelve months to 31 March 2025, down 16.0%, according to PitchBook.¹

What do funds of funds charge?

Callan's 2024 study found average management fees of 0.76% during the investment period and 0.70% after it, on top of the underlying funds' fees.¹³

Why do investors still use funds of funds?

For access to managers, diversification and tailored SMAs; SMAs grew to about 50% of Adams Street's assets over a decade.²

Do funds of funds buy secondaries?

Yes. Adams Street secured over US$5 billion for its latest Secondaries Investment Program in August 2026.⁷

Do funds of funds co-invest?

Yes. HarbourVest closed its Co-Investment Fund VII Program with approximately US$4.75 billion of commitments in July 2026.¹⁰

Which are the largest fund of funds managers?

Among the largest are StepStone Group (US$245.4 billion of assets under management), Partners Group (US$186 billion) and HarbourVest (US$167.9 billion), all at 30 June 2026.³⁴⁹

Working with Anglo-Suisse Capital

Anglo-Suisse Capital advises companies, fund managers and shareholders on capital raising, M&A and secondary transactions with professional investors in the UK, Switzerland and internationally.

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Sources

This page is general information for professional investors and is not investment advice. Figures are taken from the sources listed, as at the dates stated.