A secondary fund is an investment vehicle whose main activity is the purchase of shares in different types of investment funds, which in turn invest directly in different types of assets. This type of fund has grown considerably in recent years, as it allows the investor to access a diversified portfolio of assets, which would otherwise be difficult to access.

The first secondary fund was created in the early 1980s to provide an outlet for investors seeking liquidity for their long-term investments in private equity. Private EquityThis was achieved through the purchase of these funds at a discount on their book value or NAV. In those years VCFA, a North American manager, managed to commit around USD 6 million dollars. Since then, growth has been explosive. According to Preqin, in recent years, these funds have committed more than USD 50 billion annually.

Among its main advantages are:

• Highly diversified exposure to a portfolio of "Private Equity".Private Equity". Diversification by industry, geographic area and year of investment or "vintage".vintage".
• The funds are purchased at some percentage discount to book value or NAV, which enhances the profitability of these investments.
• Risk reduction, since it is possible to analyze the underlying assets before purchasing the units.
• Reducing portfolio risk by purchasing assets that are relatively uncorrelated to the market, especially in times of high uncertainty.
• High liquidity and lower "duration" compared to primary funds, given the frequent capital distributions from investments in mature funds.