A co-investment offers an investor in a private fund or another investor the opportunity to participate in an investment to the extent that the fund (via its manager) elects not to pursue the entire investment.  Historically, co-investments have been the province of private equity funds, managers and investors.  However, as the range of hedge fund investment strategies has grown to incorporate less liquid approaches, the relevance and use of co-investments has grown as well.  For example, in its 2014 Hedge Fund Manager Survey, Aksia found that nearly one-third of surveyed managers currently offer co-investment opportunities to their investors, and another one-third were considering doing so or would consider doing so if there was sufficient investor demand.  See “Aksia’s 2014 Hedge Fund Manager Survey Reveals Manager Perspectives on Economic Conditions, Derivatives Trading, Counterparty Risk, Financing Trends, Capital Raising, Performance, Transparency and Fees,” Hedge Fund Law Report, Vol. 7, No. 2 (Jan. 16, 2014).  This article is the first in a three-part series analyzing co-investments in the hedge fund context.  In particular, this article discusses five reasons why hedge fund managers offer co-investments; two reasons why investors may be interested in co-investments; the “market” for how co-investments are handled during the negotiation of initial fund investments; investment strategies that lend themselves to co-investments; and types of investors that are appropriate for co-investments.  Subsequent articles in the series will cover structuring of co-investments; common terms (including fees and liquidity); and regulatory and other risks.