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Johann H, a seasoned investor with Moonfare, shares his approach to building a diversified private equity portfolio designed to safeguard his family's wealth for generations to come.
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Due to the sensitive nature of the information in this article, we have used a pseudonym to protect our investor’s privacy.
As a dedicated family steward, Johann invests with a long-term vision for his children and their future. With a background in banking and private equity, he has a thoughtful approach to wealth preservation and growth.
For him, diversification is key to legacy-building. Spreading investments across markets and strategies helps enhance performance and stability over long periods of time.
Johann is a firm believer in the illiquidity premium – the additional return investors can earn by committing capital to private equity rather than keeping it all in public markets (Capital at risk).
“If you have capital that you don't need to use now, then liquidity may not matter so much,” he explains. “So you may as well invest in an illiquid asset class like private equity and get the illiquidity premium.”
Johann believes this long-term mindset is particularly important when investing for future generations. “When I'm investing for my children, everything goes into PE. Because my kids don't need that money in the next 15 or 20 years so that allows me to get the illiquidity premium on the money set aside for them.”
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In exchange for locking up capital, investors can earn a premium, often achieving higher returns than from liquid, publicly traded investments.¹ The illiquidity premium arises from the unique characteristics of private markets:
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While Johann sees the illiquidity premium as a core advantage, he emphasises that it only delivers value when paired with true diversification.
Private equity offers strong potential for diversification, as more companies stay private for longer, limiting publicly listed opportunities.² Over the past 30 years, public markets have shrunk, making private equity essential for accessing a diverse range of businesses in varied industries, geographies and strategies.
Johann uses Moonfare to construct a balanced portfolio, carefully selecting funds that help him achieve meaningful diversification.
“Moonfare offers me a flow of quality funds in the respective strategies – VC versus classic, mid cap versus large cap, EU versus US. I don't only get one fund in Europe, I get multiple across Europe and the US, and both mid-cap and large-cap.”
Johann explains why he doesn’t choose traditional banking options for private equity investing.
“If I invested in PE through a private bank, and if I am lucky enough to get premium service without being a top customer, I would get four, maybe five funds in a year. That’s not much in terms of diversification.”
He emphasises the scale of diversification he achieves with Moonfare. “If you counted the number of individual companies that Moonfare has indirectly invested in through the feeder funds that have been set up over the years, that number must be absolutely staggering in terms of diversification.”
With access to a broader selection of funds, Johann has more opportunities to diversify effectively and build a portfolio that suits his investment strategy.
“If you have a diversified portfolio,” he notes, “then you don’t need to rely heavily on the performance of an individual fund.”
To date, Johann has made 34 investments through Moonfare.
“So, in effect,” he continues, “I’m using Moonfare to buy my own private equity index through the range of funds I can access. And this has allowed me to build a portfolio that I have absolute confidence in. I know I will get my average return that pays me an illiquidity premium.”
Johann says that he doesn’t expect Moonfare to find him the one standout fund that will triple or quadruple his investment. Instead, he values consistent access to high-quality funds that, on average, deliver strong long-term returns.
“I don't rely on Moonfare to find me the needle in the haystack. What I want, on average, is a diversified portfolio that delivers one-and-a-half to two-times my investment, net of fees.”
Johann also explained how he has set up a business structure for his children to ensure long-term investment in private equity while leveraging tax advantages.
He uses donation limits to transfer wealth efficiently, avoiding inheritance taxes. Instead of directly donating money to his children, he places the funds into a company structure, which he will donate to them over time.
For Johann, investing is all about securing his family’s future and ensuring that his wealth continues to grow across generations.
The Moonfare Private Office provides him with the access needed to build a carefully curated portfolio that supports his legacy.
"The simple principle behind Moonfare's funds is that they pay me an illiquidity premium in return for an illiquid asset class (Capital at risk). This, I assume, is roughly between three and five percent more than other more liquid alternatives. And your platform simplifies my private equity investing. It gives me the access I want to top-tier managers and it’s in a diversified way."
By using Moonfare Private Office, Johann is able to uphold his role as a family steward – preserving wealth, ensuring diversification and investing with a generational perspective in mind.
Important notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.
Benefit from what institutional investors already know: the greatest shareholder value comes from private markets, and funds like those offered on Moonfare have generated an average IRR of 19% — outperforming the S&P 500 by 13%.*
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¹ Minimum investment may vary by country and local regulation.
² Source: McKinsey "Private Markets Annual Review 2022"
³ Past performance is no guarantee of future returns.
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