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CFA Level I · CFA Level I Exam · Alternative Investment Features, Methods, and Structures

An investor wants exposure to a private equity strategy but lacks the capital and expertise to select and monitor individual deals. Which investment method is most likely to give the investor direct access to a professionally managed pool of private assets without selecting the underlying investments?

Fund investment is the best fit. The investor commits capital to a pooled vehicle run by a professional manager who selects and manages the assets. Direct investment and co-investment require the investor to evaluate and monitor individual deals, which demands more capital and expertise.

  1. ACo-investment
  2. BFund investmentCorrect
  3. CDirect investment

Explanation

In a fund investment, the investor commits capital to a pooled vehicle and the general partner selects and manages the underlying assets. Direct investment and co-investment both require the investor to evaluate and monitor specific deals, which needs more resources and expertise.

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