After a bruising “funding winter,” private markets have snapped back to life. Bain’s 2025 review shows that the PE/VC ecosystem attracted US $43 billion across roughly 1,600 deals, restoring India to the No. 2 spot in Asia-Pacific for both growth and buy-out funding. As of May 2025, India counted 122 unicorns worth more than US $363 billion, a strong sign of the ecosystem deepening.
The shift underpinning this resurgence is driven by Indian family offices, UHNIs and HNIs recognising the potential of private markets. But accessing private markets is challenging: deals in the space are relationship-driven, capacity-constrained, and subject to strict regulatory oversight. Moreover, investors need substantial resources and expertise to identify and select the best investment opportunities. This makes access to private markets complex and competitive.
One gateway to this space is to build an in-house team, which requires hiring investment professionals, due diligence for manager selection, and deep market intelligence across sectors. Manager selection is particularly crucial because subpar manager quality can systematically undermine returns regardless of optimal portfolio construction and market positioning. Equally important is relationship capital — which can take years to develop — to access top-tier opportunities. Furthermore, there are extensive legal, compliance, and operational infrastructures to maintain.
These considerations make an in-house PE/VC team a time-consuming and expensive affair, and may not be a viable option for most UHNW and HNW investors. The question, then, is: What is the most capital- and time-efficient way to access the best-performing funds in private markets?
The second approach — a Fund-of-Funds (FoF) — offers a practical answer to this question. This article explores everything you need to know about a Fund of Funds.
A closer look at Fund-of-Funds
A Fund-of-Funds pools commitments from many investors and redeploys that capital as a limited partner in a hand-picked portfolio of private-equity and venture-capital funds. Since the FoF aggregates tickets, an individual investor can participate with a fraction of the cheques that blue-chip GPs usually demand—opening the door for HNIs who would otherwise be priced out. Furthermore, owing to their structure and mechanism, FoFs deliver instant diversification by stage, strategy, vintage and manager.
What makes the model more powerful is the way it outsources all the heavy lifting. A Fund-of-Funds team takes over every labour-intensive stage of private-equity investing: it leverages long-standing GP relationships to secure scarce allocations, runs the deep due-diligence and portfolio-construction work that balances vintages, strategies and sectors, and then actively monitors each underlying fund.
Through an FoF, investors can avoid the cost and bandwidth burden that it takes to build an internal team, yet still capture the return potential of top-tier private-equity managers in one streamlined commitment. It packages institutional-grade diversification and professional oversight into a single line item, at a far lower minimum ticket than a do-it-yourself programme.
Access Points
To construct a resilient private-markets programme, a sophisticated Fund-of-Funds relies on more than one channel of deployment. It blends three entry points to balance risk, liquidity, and upside:
- Primary funds: Deploy fresh capital into newly raised PE/VC funds, providing full-cycle exposure to a manager’s next generation of deals.
- Secondary funds: acquire seasoned interests from existing limited partners, putting money to work quickly, shortening the J-curve, and adding instant vintage diversification.
- Co-investments: These let the FoF join lead general partners in direct stakes alongside the flagship fund, capturing incremental ownership in high-conviction companies at meaningfully lower blended fees and carry.
Together, this tri-pronged approach delivers a smoother cash-flow profile, broader diversification, and the potential for enhanced net returns.
Advantages of a Fund-of-Funds
A Fund of Funds addresses the complexities of private markets by consolidating expertise and access, transforming a complex landscape into a more manageable and strategically sound investment avenue. It delivers a suite of investor-focused advantages, including:
- Access: A FoF’s scale and long-standing GP relationships win allocations in oversubscribed funds that are typically closed to individual investors.
- Diversification: One commitment spreads capital across multiple stages (early-stage VC, growth, buy-out) and multiple best-in-class managers.
- Co-investments: Owing to its large commitment size and strong institutional relationships, an FoF is often invited to participate in exclusive co-investment opportunities, which are rarely available to individual investors.
- Due Diligence: A dedicated research team screens, underwrites, and monitors every underlying fund, saving you the time, cost, and expertise needed to evaluate dozens of managers on your own.
- Institutional Rights & Governance: Acting as a sophisticated institutional LP, the FoF offers tighter reporting and investor-friendly protections, ensuring alignment between your interests and those of the GPs.
Final thoughts
India’s private equity ecosystem is once again expanding at pace, but larger cheque sizes, tighter allocations, and an intensifying regulatory spotlight have raised the entry bar for individual family offices.
FoFs offer Indian HNI and UHNI families a chassis that is highly-regulated, well-diversified, and sufficiently nimble to provide investors with professional access to India’s most competitive private-market managers. A thoughtfully chosen FoF can serve as the cornerstone of an alternatives programme calibrated to India’s new growth cycle.
