Traditional private equity (PE) funds present several challenges for investors. As a limited partner (LP) in a typical PE fund, you may face high fees, including management fees and carried interest, which can significantly reduce your net returns. Additionally, investors typically need to plan ahead and keep capital readily available to meet capital calls. This can lead to opportunity costs, as capital set aside for future commitments foregoes potential returns from other investments. Furthermore, PE funds are often under pressure to deploy capital within a set timeframe, which can result in investments that are not ideally timed, potentially yielding subpar returns.

At Pharos MFO, rather than lock clients into traditional PE funds, we offer a more flexible and efficient solution. We use a total portfolio approach that keeps each client fully invested and exposed to market opportunities. When an opportunity to invest in private assets arises, we pool resources from multiple families and co-invest directly in private equity opportunities, allowing clients to participate on a pro-rata basis. To maintain each client’s overall risk-return profile, we adjust the weightings of the remaining components of their portfolios (the liquid parts), ensuring alignment with their individual risk appetite.

Our opportunistic strategy ensures that we only invest when there is a compelling case, avoiding the pressure to deploy capital unnecessarily. Unlike traditional funds, we maintain the flexibility to make investments based on market conditions and individual deal merit, rather than imposed deadlines. Additionally, through our co-investment model, we significantly reduce fees and eliminate the need for capital calls, giving our clients direct exposure to top-tier opportunities without the typical financial burdens.

With our active management and strong industry relationships, we are well-positioned to identify and access attractive private equity opportunities. This approach not only mitigates the common drawbacks of traditional private equity investments but also provides our clients with greater flexibility and the opportunity to capitalize on the most compelling investment opportunities, without the constraints of high fees and opportunity costs.