in the future

With Moonfare, qualified individual investors can now access top-tier private equity funds and gain the benefits of a more diversified portfolio than ever before.

Access private equity,
an asset class that has outperformed and outgrown public markets

Past performance is no guarantee of future returns.

CA Private Equity (PE) Index as sourced by Cambridge Associates’ Q3 2019 “Private Equity Index and Selected Benchmark Statistics” report. The Cambridge Associates Private Equity Index is a pooled horizon IRR calculation based on quarterly data compiled from 2,220 private equity funds (buyout and growth equity), including fully liquidated partnerships, formed between 1986 and 2019.

S&P 500 Total Return Index as sourced from Yahoo Finance. S&P 500 TR Index data are annual compounded return calculations which are time weighted measures and are shown for reference and directional purposes only. The CA PE Index is not an investable index and is used solely for illustrative purposes.

Due to the fundamental differences between the calculations underlying the CA PE Index and the S&P 500 Total Return Index, direct comparison of IRRs to time weighted returns is not recommended.

The Private Equity index data shown above does not take into account the effect of fees and expenses on the Moonfare feeder fund level which are levied on top of a target fund. Moonfare feeder fund fees and expenses, on average, amount to a one-time structuring fee of 100bps, an annual management fee of 50bps and anticipated annual partnership costs of 40bps depending on, among other things, the feeder fund size, investment size, capital call schedule, additional fees levied by distribution partners (if any) and target fund terms as disclosed in the respective feeder fund’s documentation available on the platform.

With one of the most attractive risk-adjusted returns among asset classes, private equity has historically outperformed public markets.

Private Equity development and role in portfolios

Private markets are going mainstream. Private equity’s net asset value has grown more than sevenfold since 2002, twice as fast as global public equities. And consider the growth in US PE-backed companies, which numbered about 4,000 in 2006. By 2017, that figure rose to about 8,000, a 106 percent increase. Meanwhile, US publicly traded firms fell by 16 percent from 5,100 to 4,300 (and by 46 percent since 1996).

Private equity has historically provided one of the most attractive risk-adjusted returns among asset classes. Hence, portfolios allocating to private equity have historically generated a greater return with similar risk as traditionally diversified portfolios.

Data from at least the last three decades shows that private equity provided investors with the highest risk-adjusted returns as an asset class. Private equity offered the highest annualised returns among the major asset classes while exhibiting less volatility than listed equities, even when desmoothing private equity returns.

Sources: Moonfare (Private Equity in a Portfolio Perspective) , McKinsey (Global Private Markets Review 2019)

Empower tech innovation across geographies and sectors

Through investments across next-generation software and hardware, digital infrastructure and emerging technology companies, private equity funds facilitate sustainable value creation.

Private Equity investments vs. sectors, development

Private equity has directly capitalised on this difference and we believe those able to excel in this sector are more likely to outperform markets.

Figure 1: Investments in Technology Segments as Between Private Equity and Public Markets

The software sector has not only been able to generate the highest average money multiples across industries surveyed in Bain’s report, but also outpaced other industries when it comes to generating value through EBITDA growth, which we consider the most important indicator of value generation in portfolio companies.

Figure 2 : Gross MOIC by Value Creation Lever, for Fully Realized Buyout Deals (2010 - 2018)

One of the long-term trends is enterprise software, which has become one of the most fundamental verticals during the first two decades of the century, reaching near ubiquity and a unique status. Private equity firms able to stand out by developing networks and playbooks in this vertical represent a promising opportunity.

Sources: Moonfare (Private Equity in a Portfolio Perspective) , McKinsey (Global Private Markets Review 2019)

Join the entrepreneurs that are driving
tomorrow’s global economic growth

Across industries and continents, private equity fund managers are using theiroperational expertise to build the leading businesses of tomorrow.

Moonfare only works with top fund managers across US Tech, Buyout and Growth Equity. Less than 5% of available funds pass our due diligence process

In the wake of strong competition and rising valuation multiples, successful fund managers have differentiated themselves by focusing on operational value creation, as a more persistent and replicable way of creating value within their portfolio companies.

Not only have private equity fund managers shifted their attention to operational value creation, their capacity to take active ownership and leverage their informational advantage has also resulted in consistently higher revenue growth compared to broad market trends in both North America and Western Europe (see Figure 3). One hypothesis is that this is why private equity has outperformed public markets across most time horizons and why, in our opinion, it is likely to continue to do so.

Figure 3: Private Equity has Shifted Away from Leverage As Share of Value Creation
Source: CERPES, IHS, Bain analysis

Value creation across PE strategies

•  Venture capital: Finding the next billion-dollar companies — and helping them grow to their full potential

•  Growth: Investing in fast-growing companies and using expertise to increase value, often exponentially

•  Buyout: Improving underperforming companies — often hidden gems — with a well-tested value creation playbook

Current Investment Opportunities

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