Real estate funds of funds are a small but important part of the private real estate fund universe. They can offer investors exposure to a wide variety of locations and strategies through investments in underlying funds, enabling investors to obtain exposure to a diversifi ed portfolio of fund investments via a single commitment, and gain exposure to locations and strategies that they might otherwise not be able to access. Smaller investors can also gain exposure to larger funds that might have minimum commitment sizes which make them inaccessible to invest in directly. Additionally, fund of funds managers are an important source of capital for private equity real estate fund managers, both through their own investments made through their fund of funds vehicles and, because many such managers are also responsible for the allocation of investor capital, through the separate account mandates they hold or the investments they advise on through their role as investment consultants.
Source : Preqin