A well-managed Private Equity or Venture Capital AIF is not just a single investment; it is a **diversified portfolio** of underlying companies. A typical fund might invest in 10 to 20 different businesses across various sectors (e.g., Tech, Healthcare, Fintech, Manufacturing).
This diversification mitigates the **single-asset risk** inherent in private investing. If one startup fails, the success of two or three others can cover the loss and still deliver substantial returns for the overall fund. This inherent diversification is a major selling point for sophisticated investors.
