(Harvest) “Hedge fund co-investments are potentially attractive for allocators as they offer access to high-conviction ideas with lower fees and potentially enhanced returns. Our approach has been to establish a true partnership with our co-investors by identifying a series of trades within a certain sector or of a certain nature, and then pursuing those trades collectively to their benefit” says David Dunn , Co-Managing Partner and Co-CIO, at Cross Sound Management LLC. “We believe finding investments that are uncorrelated to the market and to other hedge fund holdings is an attractive proposal for our co-invest partners. Also, we’ve found that an engaged co-investor can be a value-add to us. I can think of one particular institution that we do business with that does add value to a lot of our trades and we actually derive benefit from having their team join us at a meeting or on a conference call because they have differentiated ideas. This is an unexpected, but certainly welcomed benefit of the co-investment construct that we are seeing.”

To read this article: