Generalist Funds vs. Specialist Funds

A generalist fund invests across multiple sectors, while a specialized fund focuses its investments on specific industries or themes.
With the growth of private equity, specialization has increased, particularly in Europe and the United States.
In highly competitive markets, in-depth knowledge of a sector can facilitate access to the most attractive companies.
It also provides a better understanding of the challenges faced by executives and management teams.
Specialized funds have a precise understanding of the performance metrics and success factors specific to their sectors.
This expertise can be formalized into methodologies or “playbooks” used to support companies.
Several models coexist today: funds focused on a few sectors, multisector funds, and thematic funds.
Highly specialized funds have in-depth expertise but are less flexible in their capital allocation.
Multisector funds offer greater diversification but do not always have the same level of expertise in every sector.
Thematic funds seek to combine in-depth expertise with flexibility across multiple subsectors.
The “ due diligence ” is therefore essential for verifying the authenticity and depth of a manager’s expertise.
Specialization thus plays an increasingly important role in investment selection and value creation in private equity.

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