Once an investor accepts that women’s health represents a credible investment opportunity, the next question is the implementation i.e. how the exposure to women’s health investment opportunities should be replicated within their portfolios.

For investors considering private-market opportunities—the focus of this article—that means deciding whether to invest directly in companies, allocate to specialist fund managers or combine the two. Each route offers a different balance of diversification, control, specialist expertise, cost and portfolio risk.

Direct investments offer transparency and control. Funds provide professional selection and diversification. It is tempting to compare the two routes to decide which is better, but that is the wrong place to begin.

The appropriate investment structure depends on what the investor wants the allocation to achieve, where it will sit within the wider portfolio and which capabilities the investor possesses internally. A family office seeking exposure to one area of personal conviction may reach a different conclusion from an institution attempting to build representative exposure across women’s health.

The route should follow the investment objective rather than determine it.

Start with the role of the allocation

Before evaluating companies or managers, investors should define what they are trying to access.

Is the objective to participate in the broader development of women’s health as an investment market? Is there conviction around a specific condition, technology or company? Should the allocation provide diversified exposure to healthcare innovation, or is it intended to complement healthcare investments already held elsewhere?

These distinctions matter because women’s health is not one market. It extends across biotechnology, diagnostics, medical devices, care delivery, healthcare services and clinical AI. The underlying companies may range from pre-clinical businesses requiring years of scientific development to commercial healthcare platforms with established revenues.

An investor seeking broad exposure therefore faces a portfolio-construction question, not merely a company-selection question.

The investor must also decide how much capital can be committed, the acceptable level of illiquidity and company-specific risk, and whether the organisation has the expertise and governance capacity to oversee the investments. Only then can the available routes be assessed properly.

Direct investments provide control, but also concentration

The appeal of direct investment is understandable. Investors can see the underlying company, meet the management team and decide exactly where their capital will be deployed. They may obtain governance rights and build conviction around a particular condition or technology. Direct ownership can also appear more transparent than investing through a fund.

But transparency should not be confused with lower risk.

Healthcare companies face risks that are often highly idiosyncratic. A clinical result, regulatory decision, reimbursement outcome or financing round can materially change the value of an individual business. Even a company addressing a substantial market may fail because its science does not hold, its product cannot secure approval or its commercial model proves uneconomic.

Direct investing therefore requires more than the ability to identify an attractive company. Investors must assess the clinical or scientific evidence, regulatory pathway, reimbursement model, intellectual property, management capability, valuation and likely capital requirements. They must also consider whether they can participate in subsequent financing rounds and what happens if the company requires more time and capital than initially expected.

Diversification presents a further challenge. One or two companies may provide meaningful exposure to their individual outcomes, but they do not constitute a women’s health allocation. Building a sufficiently diversified direct portfolio can require more capital, specialist expertise and follow-on capacity than investors initially anticipate.

Direct investments are most appropriate where the investor has the capability to underwrite company-specific healthcare risk and accepts the resulting concentration.

Specialist funds provide expertise, but manager selection matters

A specialist fund transfers responsibility for sourcing, underwriting, portfolio construction and ongoing company oversight to a dedicated manager. For investors without an internal healthcare investment team, this can provide a more efficient route to diversified exposure.

A strong specialist manager may bring relationships with clinicians, researchers, founders and industry partners. The manager may understand the regulatory and reimbursement pathways relevant to the companies it backs and support those companies through later financing rounds, commercial partnerships and potential exits.

However, investing through a fund replaces company-selection risk with manager-selection risk. The investor delegates substantial judgment to one team and must determine whether that team possesses the capabilities required to execute the proposed strategy.

This is particularly important in women’s health, where many dedicated strategies are being built by emerging managers. Emerging managers may offer specialist expertise, focused networks and access to opportunities that larger platforms overlook. But a compelling thesis does not, by itself, establish institutional quality.

Investors still need to understand how the manager sources investments, how decisions are made, what produced the track record and whether the proposed fund size supports the strategy. They must assess portfolio construction, follow-on reserves, team stability, governance and operational infrastructure. They must also determine whether the manager’s definition of women’s health will produce the exposure they expect.

One specialist fund may cover only part of the opportunity

A specialist fund can provide valuable exposure without providing representative exposure.

One manager may concentrate on early-stage digital health in North America. Another may invest primarily in European medical devices. A third may focus on biotechnology or therapeutics. Each may be excellent within its field while leaving large parts of the women’s health opportunity untouched.

This matters because women’s health acts as a cross-cutting lens across healthcare. Relevant innovation is occurring across different scientific disciplines, company stages, business models and geographies. No single manager is likely to possess equally strong expertise and access across all of them.

Investors should therefore look beyond the number of companies in a fund and examine the underlying sources of diversification. A portfolio of ten companies can remain highly concentrated if those businesses depend on similar technologies, target the same condition or share the same regulatory and financing risks.

The relevant question is not simply whether a fund is diversified. It is what the investor will remain exposed to if the manager’s central assumptions prove wrong.

Combining routes can solve different portfolio problems

Investors do not necessarily have to choose between direct investments and specialist funds.

A diversified allocation can use specialist managers to provide the core exposure and selected direct or co-investments to increase participation in particular companies. Secondaries may add exposure to more mature assets or earlier fund vintages, potentially changing the timing and visibility of portfolio cash flows.

Each route should have a defined role.

Manager commitments can provide diversified access to specialist expertise and proprietary sourcing. Direct co-investments can allow the investor to increase exposure to selected companies, although they still require independent underwriting and concentration controls. Secondaries may provide greater asset visibility, but pricing, selection and access remain critical.

Combining routes does not automatically create a well-constructed portfolio. Several funds may hold the same companies, rely on similar technologies or concentrate on the same financing stage. A direct investment may duplicate exposure already held through an underlying manager. The portfolio must therefore be assessed on a look-through basis.

The objective is not to collect several attractive investments. It is to understand what each one contributes to the portfolio as a whole.

Five questions investors should answer

Before selecting a vehicle, investors should be able to answer five questions:

1. What role should women’s health play in the portfolio?
   Is it a strategic allocation, a healthcare sub-allocation or a series of selected opportunistic investments?
2. What exposure is the investor actually seeking?
   Is the objective broad participation across women’s health, or conviction around particular conditions, technologies, stages or geographies?
3. Which capabilities exist internally?
   Can the investor assess clinical evidence, regulatory risk and follow-on financing requirements, or should those responsibilities be delegated to specialist managers?
4. How much concentration is acceptable?
   Does the investor have sufficient capital to construct a direct portfolio, and would one specialist fund create unintended manager, stage or subsector concentration?
5. What governance can the investor sustain?
   Direct investments, fund commitments and co-investments require different levels of diligence, monitoring and decision-making capacity.

The answers should determine the structure.

Selecting the route is only the beginning

There is no universally correct way to invest in women’s health. The appropriate structure depends on the role the allocation is intended to play, the investor’s internal capabilities and the risks already present elsewhere in the portfolio.

Direct investments can provide transparency and control, but they require specialist underwriting, sufficient diversification and the capacity to support companies through subsequent financing rounds. Specialist funds can provide expertise, sourcing access and broader company exposure, but they introduce dependence on the judgment and institutional quality of the manager. A diversified approach can combine complementary capabilities, although it must be constructed deliberately to avoid duplication and hidden concentration.

For many investors, specialist managers will form at least part of the allocation. Once that decision has been made, the next challenge is determining which managers deserve an allocation. Investors still need to understand where the manager’s edge genuinely lies, what produced the track record, whether the portfolio can deliver the stated strategy and whether the organisation can steward long-term capital. These decisions rarely turn on one fact or metric. They require evidence, interpretation and judgment.

I write about these topics each week on my newsletter Diary of an Allocator on Substack Drawing on more than 20 years as an institutional allocator, I share field notes on assessing managers and investments, conducting due diligence and understanding what an investment contributes to a portfolio. I go beyond surface-level checklists to examine the questions, trade-offs and judgment behind allocation decisions. You can follow my weekly notes on Substack.