
Primary portfolio 12-year TVPI with differing
co-investment allocations
Source: For illustrative purposes only.1
Key takeaway
Co-investment funds can provide potential diversification while enhancing returns—making them a powerful tool for LPs navigating today’s more capital constrained investing environment.
Market conditions have caused many limited partners (LPs) to reduce their GP rosters, pare back commitment sizes, or both—introducing greater concentration into their portfolios. We believe co-investment funds offer LPs a single-ticket method for accessing a diversified portfolio of market-leading private equity–backed companies spanning sectors, geographies, stages, transaction sizes, and vintage years. In fact, our analysis reveals a compelling trend. As the co-investment percentage increases in a primary portfolio, TVPI and risk-adjusted returns improve while the probability of returns falling below the 1.5x hurdle rate declines.
As LPs navigate a tighter liquidity backdrop and ongoing macro uncertainty, implementing a co-investment fund strategy can potentially bring valuable and timely diversification that can improve performance and reduce risk. For more insights on co-investing and the role it can play in optimizing a private markets portfolio construction strategy, see our recently published “Co-investment Funds: Key to Building a Diversified Private Markets Core.”
The HarbourVest advantage
- HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, and not representative of any HarbourVest experience. The graphic and data above are based on a forward-looking Monte Carlo simulation as of June 2025. Simulation Parameters: Co-investment: Vintage years for TVPI 2004 – 2018; Three-year investment period, 60% North America, 30% Europe, 10% Asia; 100% buyout. Returns are net of management fee of 1.0% and 12.5% carried interest on realized returns for third-party funds and gross of HarbourVest management fees and carried interest. Other expenses borne by investors in the HarbourVest managed funds / accounts may reduce returns. The Sortino ratio is a calculation of the expected return, or minimal acceptable return (MAR), divided by downside deviation, and similar to the Sharpe ratio, the higher the Sortino ratio the better. Sortino in this simulation assumes a minimum acceptable return (MAR/hurdle) of 1.5x for TVPI. Diversification does not ensure a profit or protect against a loss. Past performance is not a guarantee of future results.
HarbourVest Partners, LLC is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes and should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy, or completeness of such information. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest.
Nothing herein should be construed as a solicitation, offer, recommendation, representation of suitability, legal advice, tax advice, or endorsement of any security or investment and should not be relied upon by you in evaluating the merits of investing in HarbourVest funds or in any other investment decision.
Forward Looking Monte Carlo Simulations: The information presented herein is intended for illustrative purposes only. Performance and cash flow information are forecasted utilizing a Monte Carlo Simulation which incorporates forward looking market parameters calibrated using an industry level historical dataset. The performance information does not represent the actual experience of any investor or Fund. The results of the simulation are impacted by the composition of the historical dataset, which may include an uneven representation of funds with different vintage years, sizes, managers, and strategies, and a limited pool of investment cash flow data. The actual pace and timing of cash flows is likely to be different and will be highly dependent on the underlying partnerships’ commitment pace, the types of investments made by the Fund(s), market conditions, and terms of any relevant management agreements. The results presented are hypothetical and based entirely on the output from numerous mathematical simulations. The simulations are unconstrained by the fund size, market opportunity, and minimum commitment amount, and do not take into account the practical aspects of raising and managing a fund. The simulated hypothetical portfolio results should be used solely as a guide and should not be relied upon to manage your investments or make investment decisions.
Simulated Management Fee and Carry: (if shown) The simulated performance presented herein is hypothetical and does not reflect any actual fees or expenses experienced by a client or investor. Instead, the simulated performance utilizes model management fees and carry that are assumed for modeling purposes only and applied as described below. No actual client or investor attained the performance presented here. Management fees are calculated either based on committed or invested capital and applied to portfolio’s gross capital calls according to a specified fee rate and a fee term. Carry is accrued based on a specified carry rate and applied to a portfolio’s total value after the applicable carry hurdle rate is met. Accrued carry is applied to gross NAV. Carry starts being distributed (paid out of distributions) once committed capital has been returned to investors.