Hypothetical performance can be a powerful tool in fund marketing, offering investors a glimpse into how a strategy might perform under specific scenarios. However, the use of hypothetical performance data is heavily scrutinized by regulators, particularly the SEC, to prevent misleading claims and ensure investor protection. In this post, we’ll explore what constitutes hypothetical performance, the rules governing its use, and best practices for compliance.

A co-investment is a direct investment made alongside a private equity or other investment fund by an investor who is also participating in the fund. Typically, co-investments are offered on a deal-by-deal basis and allow investors to participate in specific transactions without the fees and carried interest typically associated with the main fund. Co-investors will invest through a co-investment vehicle that will invest on a side-by-side basis with the main fund.

In recent years, a significant shift has been taking place in the private equity and asset management industries. Investors are increasingly focusing on acquiring minority stakes in General Partnerships (GPs). This strategy, commonly referred to as "GP stakes investing," is gaining traction for its ability to offer exposure to high-quality investment managers, provide recurring cash flow, and align with the long-term growth of these firms.

When structuring a business, investment portfolio, or fund, choosing the right legal entity is critical. For entrepreneurs, investors, and fund managers handling multiple assets or ventures, two common options are forming a Series Limited Liability Company (Series LLC) or creating multiple standalone Limited Liability Companies (LLCs). Each option comes with its own advantages and disadvantages.

Net Asset Value (NAV) loans have become an increasingly popular financing tool for private equity and other investment funds. These loans allow funds to unlock liquidity based on the value of their underlying portfolio assets. While NAV loans can provide short-term benefits, they come with significant risks—particularly for limited partners (LPs).

Continuation funds have gained traction as an increasingly common tool for private equity firms to extend the life of existing investments. By transferring portfolio assets from an existing fund to a new vehicle—often with the participation of new investors—general partners (GPs) can secure additional time and capital to maximize value. However, while continuation funds may offer benefits, they also come with notable risks for limited partners (LPs).