Direct Investments

In Kyle’s notes, “direct investments” is one of the structural levers an limited partner pulls when the standard fund relationship disappoints — bypassing the fund (and its fee load) to invest straight into companies or assets. It sits as the companion concept to Fees and Carry: where that note is the fee/carry economics LPs scrutinize, this one is the response — going direct to escape them. Both threads connect to the same concrete trigger Kyle filed, the saved article on Almost $14 Billion Pulled From CalPERS Equity Managers, one of the world’s largest LPs pulling capital from active managers amid the manager-selection and underperformance dynamics that push large allocators toward direct deployment.

Context: “Direct investing” by an LP (also “co-investing” or building an in-house deal team) means a pension fund, endowment, or sovereign wealth fund putting capital directly into operating companies or assets rather than through an external GP’s fund — capturing the returns without paying management fees and carried interest. Large allocators such as CPP Investments, GIC, and CalPERS have built direct-investment programs partly to reduce fee drag and gain more control, though it requires substantial internal staffing and expertise.

Where this appears

• LP — direct investments named as a lever LPs use to bypass the standard fund relationship and its fee load.
• Fees and Carry — the companion lever; going direct as the escape from fund-economics fee/carry drag.
• Almost $14 Billion Pulled From CalPERS Equity Managers — the saved CalPERS article Kyle filed as the concrete trigger for this topic.