Fund Structural Variants
medium confidence — compiled with source citation from the investment brain.
Fund Structural Variants
Fund Structural Variants
Around the flagship entity stack sits a family of auxiliary vehicles, each solving a specific segregation, capacity, or liquidity problem. ^[reports/Fund structuring tax jurisdictions.md]
Parallel funds
Parallel funds are legally separate vehicles raised side-by-side to segregate investor populations — a US-taxable tranche versus a non-US, tax-exempt, or ERISA tranche — without contaminating the other vehicle. They exist to segregate rather than commingle. ^[reports/Fund structuring tax jurisdictions.md] The trade-offs are a pro-rata investment committee allocating each deal across the vehicles, duplicated formation and audit costs, and the risk of side-letter conflicts where two LPs hold materially different terms in their respective vehicles. ^[reports/Fund structuring tax jurisdictions.md]
Deal SPVs and strip entities
Deal-level SPVs hold the actual portfolio asset, one per company. Strip entities are blocker-plus-passthrough combinations that carve tax treatment along specific asset or income lines within a single structure, letting a manager segment the tax character of a position without segmenting investors. ^[reports/Fund structuring tax jurisdictions.md]
Sidecars and co-investment
Sidecars are small vehicles around a specific deal, with reduced or back-ended carry and fees often waived or charged on invested capital — taking capital the flagship cannot absorb due to concentration limits or size. ^[reports/Fund structuring tax jurisdictions.md] Co-investment lets LPs deploy into a single deal at zero carry and reduced or zero management fee. The fee-free norm is eroding: Houlihan Lokey's LP Compass survey (September 2026) found allocators receptive to paying co-investment economics. ^[reports/Fund structuring tax jurisdictions.md] StepStone's proxy puts co-investment at more than $340bn across roughly 1,700 deals. ^[reports/Fund structuring tax jurisdictions.md]
A note on the operative ILPA text: the oft-cited 2024–25 co-investment guidance is a mislabel — the governing documents are ILPA Principles 3.0 (2019) plus the May 2023 continuation-fund guidance, and no standalone 2024–2025 co-investment document exists. ^[reports/Fund structuring tax jurisdictions.md]
Separate accounts
Separate accounts (SMAs, funds-of-one) give the largest LPs fees on deployed rather than committed capital, deal-flow covenants, and bespoke tax treatment. ^[reports/Fund structuring tax jurisdictions.md] A common gating covenant is a substantially-similar-objective clause that prevents the manager from raising a competing top-up fund that would starve the SMA of deal flow — paraphrased, roughly three-quarters of such accounts carry this protection. ^[reports/Fund structuring tax jurisdictions.md]
Continuation vehicles
Continuation vehicles (CVs) are now the dominant GP-led secondary tool, roughly doubling from 2023 to 2025. The three advisory houses disagree on the exact 2025 total — Lazard reports ~$233bn, Evercore $226bn, and Campbell Lutyens $225bn (a +40% to +53% record year, with LP-led marginally exceeding GP-led) — so the honest figure is a $225–233bn range. ^[reports/Fund structuring tax jurisdictions.md] Single-asset CVs price near par, at roughly a 3.1% average discount per Campbell Lutyens. ^[reports/Fund structuring tax jurisdictions.md]
SEC scrutiny is tightening: adviser-led secondaries must be reported in Form PF within 60 days, with fairness-opinion relationship disclosure, and LPAC consent alone is insufficient per the SEC. ^[reports/Fund structuring tax jurisdictions.md]
GP stakes and NAV finance
GP-stakes funds (minority investments in the manager itself) have matured into their own secondaries layer — Blue Owl's Dyal IV explored a ~$1.5bn continuation-vehicle sale of its portfolio. ^[reports/Fund structuring tax jurisdictions.md] NAV facilities (portfolio-secured loans) supplement subscription lines as a liquidity tool and CV alternative. ^[reports/Fund structuring tax jurisdictions.md]
LP-side wrappers
Fund-of-funds and SMAs act as LP-side wrappers — layers an investor adds to gain diversification, access, or fee negotiation rather than a structure the GP itself sponsors. ^[reports/Fund structuring tax jurisdictions.md]
The proliferation of wrappers is the mirror image of the capital-allocation question asked from the LP seat: each vehicle lets a different capital provider deploy at the price and tax treatment its own cost-of-capital demands. The continuation-vehicle boom in particular is the private-market echo of a trend bruce-flatt-brookfield has institutionalized — turning finite-life assets into permanent, compounding capital. See public-vs-private-markets for why secondary liquidity is now a primary pricing input.