International Private Fund Formation Brochure - SJ Berwin

Funds of funds
The growth of funds of funds
Funds of funds have had their issues in recent years, but the appetite in Europe
for funds which invest in other funds is likely to remain strong. Past growth
has been driven by an increased interest in private equity by both institutional
and high net worth investors, for whom these products have a number of
advantages. Many banks and financial institutions are looking at ways to bring
opportunities to their private and institutional client bases.
It is clear from performance figures in private equity that, although it has
outperformed most other asset classes in recent years, the performance of
individual funds is volatile, and there is a large spread of returns between the
bottom and the top quartiles. Many institutions and private family groups lack
sufficient resources to adequately analyse the available opportunities.
In addition, many of the UK and Continental European pension funds,
institutions and private family groups have relatively small amounts available
for investment in private equity, and so access to the better performing funds
is difficult. For these reasons, investors are attracted to funds of funds – which
provide greater access to a more diversified range of funds.
Our European network offers us the legal, tax and regulatory capability in all
major jurisdictions (Germany, France, Spain, Italy and the UK). Our offices have
developed a range of structures including pan-European funds of fund products.
We have advised on the structuring and terms of a very large number of funds of
funds, including recently closing the Pantheon Global Infrastructure Fund, a major
infrastructure fund of funds, which will invest in high-quality infrastructure funds,
with a large proportion of the fund dedicated to assets in developed countries.
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