The Families
10Talents was conceived by a group of individuals who have held executive positions at well-known banks, insurance companies, endowments and family offices who wanted quality private investment deal flow in an effort to:
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Capture an illiquidity premium over public securities that may compound the portfolio at a higher rate relative to public market returns.
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Diversify substantial listed securities portfolios.
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Balance the return swings of public markets over the market cycle.
Wall Street's Agency Problem
Through their career experiences these founding families were aware of the quality of asset managers serving top institutions; yet the opportunities those families were being offered by brokers and private banks were managers reaching for scale of managed assets rather than excellence of returns.
This happens because:
Fund managers who outperform at a small scale are incented to gather assets and increase revenues, which may precipitate an erosion of outperformance when scale is increased dramatically.
This quest for scale may cause the manager to:
Hire brokerage firms, banks, or funds-of-funds which overlay substantial fees for fundraising.