Co-investment is arguably the greatest form of alignment between fund manager and investor. When a manager has their own wealth invested alongside that of their clients, you can be assured that you’re getting the full benefit of the manager’s skills, savvy and expertise. When they make money, you make money. But perhaps more importantly, when you lose money, they lose money. Fund managers who invest a significant amount of their personal wealth in the same portfolios they run for their clients show a high degree of commitment and conviction to investors.
How can you tell whether your fund manager invests alongside you? Unfortunately, it’s not that easy to determine. While some managers proudly trumpet that they “eat their own cooking”, by and large there is little reporting on the practice of co-investment.
In an effort to improve transparency on the issue, we have written an article titled Show me the Money: The Importance of Co-investment, which examines the importance of co-investment and challenges the industry’s lack of focus on the topic.
We have also published a supplementary document titled Showing You the Money: Co-investment at Steadyhand, which provides details of the level of co-investment among our employees and fund managers.
Both articles are available in the Library section of steadyhand.com.