AMG Pantheon Fund
Private Equity—An Alternative Path to Equity Investing
What is private equity?
Private equity refers to investments in public and non-public companies or
assets through privately negotiated transactions.
The typical investment life cycle is:
w
Investment
w
Improvement
w
Exit
Private equity funds invest directly into private companies or
conduct buyouts of public companies that result in a delisting of
public equity. The majority of these controlling interests are funded
through debt; the rest of the purchase price comes from the fund’s
own capital.
Private equity managers seek to acquire quality assets at attractive
valuations and use their expertise to improve portfolio companies’
financial results and value. This is generally done by implementing
operational, financial and management changes.
Returns on private equity generally occur as a result of an asset’s
merger or sale, an initial public offering or a recapitalization. These
“exits” allow private exit managers to cash out and realize potential
gains.
PAGE 2 | AMG PANTHEON FUND
Private equity—in a class by itself
Top performing asset class
Private equity’s history of outperformance
w Private equity has outperformed stocks,
10 years ending December 31, 2016
bonds and REITs over the past 10 years.
w A fast growing asset class offering a large
universe of investment opportunity, private
equity assets under management are now
at $2.4 trillion, a new high as of June 2015.1
Listed Equity | 7.42%
Source: 2016 Preqin Global Private Equity & Venture Capital Report.
Source: Bloomberg. Investment returns 10 years ended June 30, 2016.
Listed equity, fixed income, private equity and real estate are respectively
represented by the following indices: S&P 500, Bloomberg Barclays
Aggregate U.S. Bond Index, Cambridge Associates U.S. Private Equity,
Dow Jones U.S. Select REIT. Please see index descriptions at the end of
this brochure. Indices are unmanaged, do not incur expenses, and are
not available for investment. Returns are calculated as a 10-year average
ended December 31, 2016. The chart is for illustrative purposes only. The
appropriateness of private equity for any individual portfolio will vary.
Index performance is not representative of the Fund’s performance. Please
call 800.835.3879 or visit our website at www.amgfunds.com/pantheon to
obtain Fund performance information. Past performance is no guarantee
of future results.
1
Fixed Income
Real Estate | 6.86%
0
10.0
Embraced by institutional investors
w U.S. public pensions have long been
Stanford and Yale have invested in
private equity for decades, with current
target allocations of 20%, 23% and 31%,
respectively3.
Source: Preqin, May 23, 2016.
Source: Harvard 2016, Stanford 2016, Yale 2016.
Chart is for illustrative purposes only. Individual asset allocation will vary.
Individuals must determine the percentage of allocation to private equity
based on their individual portfolio.
2
3
2
4
2010
6
8
Returns (%)
10
2011
12
Institutional allocations to private equity
9.5
9.0
Target Allocation (%)
w Large endowments such as Harvard,
%
Private Equity | 10.71%
2009
investing in private equity and most have
steadily increased their target allocations
over time—the average public fund now
targets an 8.3% allocation2
| 5.13
8.5
8.5
8.3
8.5
7.8
8.0
7.8
7.5
7.5
7.5
7.0
2009
2010
2011
2012
2013
2014
2015
U.S. Public Pension Funds’ Average Target Private Equity Allocation
AMG PANTHEON FUND | PAGE 3
2012
Why professional management?
Professional management for a complex asset class
w
A
large opportunity set of private equity investments exists across a range of maturity stages (venture capital, growth
capital, mezzanine, special situations, buyout), as well as for differing vintages, industries and geographies.
w
M
uch of the information needed to evaluate private equity managers is not publicly available. A professional manager’s
relationships within the industry—and the access to the information sources they provide—is critical for investment success.
w
S
ignificant dispersion exists between the top and bottom performing private equity managers. Professional management
is important for selecting strong performing private equity managers as investment targets.
Manager selection is important—wide gap exists between strongest and weakest
private equity performers
w
T
he difference in performance results between top and bottom quartile investment managers (performance “spreads”) can
vary significantly by asset class.
w
1 st quartile private equity managers outperformed those in the 4th quartile by over 13% over the past ten years–this is a
dramatically wider performance spread than for public market funds where spreads have averaged about 2% or less.
w
F
or this reason, expertise in identifying strong managers and avoiding weak ones is particularly important when investing in
private equity.
15
Performance
Spread (%)
12
Performance spreads between 1st and 4th quartile managers—Ten years ended 06/30/16
13.06%
9
6
3
0
2.04%
Private Equity
U.S. Small-Cap Public Equity
1.91%
2.27%
U.S. Large-Cap Public Equity
U.S. Bond
Source: Thomson Reuters, Morningstar Direct. Private Equity returns are based on the Cambridge Associates U.S. Private Equity Index for all vintage years from 2006-2016. Please
see index description at the end of this presentation. U.S. Small-Cap Public Equity, U.S. Large-Cap Public Equity and U.S. Bond are based on the following Morningstar categories:
U.S. Small-Cap Public Equity—Small Blend, Small Growth, and Small Value. U.S. Large-Cap Public Equity—Large Blend, Large Growth, and Large Value. U.S. Bond—U.S. Taxable
Bond category. Index performance is not representative of the Fund’s performance. Please call 800.835.3879 or visit our website at www.amgfunds.com/pantheon to obtain Fund
performance information. Past performance is no guarantee of future results.
PAGE 4 | AMG PANTHEON FUND
AMG Pantheon Fund
Delivering private equity access alongside institutional clients
Single-allocation solution for private equity investing
Simplified access to the asset class
w
With its multi-manager structure, the AMG Pantheon Fund
w
Available to accredited investors1
is designed to offer a complete investment solution in the
w
Low
investment minimum, from $25,000
w
M
onthly valuations and subscription periods
w
P
erpetual life
opportunities across the private equity universe—in
w
N
o capital calls2
primary funds, secondaries and co-investments.
w
1 099 tax reporting
P
rofessional portfolio management includes a rigorous
w
E
RISA eligible
asset class through a single investment.
w
T
he Fund seeks diversification across manager,
stage, vintage, industry and geography by targeting
w
manager selection process, and ongoing investment
monitoring and risk management.
AMG Pantheon Fund takes into account key private
equity diversifiers:
Stage
Vintage
Vintage
Industry
Portfolio
Manager
Industry
Geography
Manager
Geography
Private equity diversification
in one allocation
1
2
Stage
The first year a private equity fund
makes a portfolio company investment
Industry sectors
Global regions
Investment managers
(General Partners)
Private equity investments’
stages of maturity
Diversification does not guarantee a profit or protect against a loss in declining
markets.
Accredited Investor has the meaning set out under the Securities Act of 1933.
A capital call is a request for funds issued to limited partners when the general partner has identified a new investment and a portion of the limited partner’s committed capital is
required to pay for that investment.
AMG PANTHEON FUND | PAGE 5
Why Pantheon?
A global leader in private equity fund investing
About Pantheon
Leadership
Experience
Results
Over 34 years of
providing innovative
private equity
investment solutions to
institutional investors
Exclusively focused
on private equity
investing
Disciplined, longterm investment
process incorporates
rigorous due diligence
and ongoing risk
management
Global footprint
includes deep
resources in The
Americas, Europe and
Asia
Manages global
primary, secondary,
co-investment and
infrastructure private
equity programs
Strong track record2
of delivering results for
institutional investors
Founded in 1982, Pantheon manages
AUM of over $35 billion1, and is
a leading global private equity
fund investor, managing private
equity funds and separate account
programs for investors around the
world. The firm’s long-term presence
in Europe, the U.S. and Asia has
allowed the team to develop an
extensive network of relationships
for rigorous on-site due diligence
and ongoing investment monitoring.
Pantheon is a trusted partner to over
380 institutional investors across the
globe, including public and private
pension plans, insurance companies,
banks, endowments and foundations.
$35.2B AUM as-of September 30, 2016. This
figure includes assets subject to discretionary
or non-discretionary management, advice or
those limited to a reporting function.
2
Past performance is no guarantee of future
results.
1
London
|
San Francisco
PAGE 6 | AMG PANTHEON FUND
|
Hong Kong
|
New York
Disclosures
Investors should carefully consider the Fund’s investment objectives, risks,
charges and expenses before investing. For this and other information,
please call 800.835.3879 or visit www.amgfunds.com/pantheon for a free
prospectus. Read it carefully before investing or sending money.
This document is not an offer to sell securities issued by AMG Pantheon Fund, LLC (the “Fund”).
Investors should consider the Fund’s investment objective, risks, charges and expenses
carefully before investing.
All investors in the Fund must be “Accredited Investors,” as defined in Regulation D under the
Securities Act of 1933. The Fund is a non-diversified, closed-end investment company designed
for long-term investors and not as a trading vehicle. The Fund has limited operating history
upon which investors can evaluate potential performance.
The Fund differs from open-end investment companies in that investors do not have the right
to redeem their units on a daily basis. Instead, repurchases of units are subject to the approval
of the Fund’s Board of Directors. The Fund’s units represent illiquid securities of an unlisted
closed-end fund, are not listed on any securities exchange or traded in any other market, and
are subject to substantial limitations on transferability. LIQUIDITY IN ANY GIVEN QUARTER IS
NOT GUARANTEED. YOU SHOULD NOT INVEST IN THE FUND IF YOU NEED A LIQUID INVESTMENT.
The Fund will invest substantially all of its assets in AMG Pantheon Master Fund, LLC (the
“Master Fund”). This investment structure is commonly referred to as a “master-feeder” fund
arrangement. The investment advisor of the Fund and the Master Fund is Pantheon Ventures
(US) LP (the “Advisor”). The Master Fund is non-diversified, which means that it may be invested
in a relatively small number of underlying funds or portfolio companies, which subjects the
Master Fund, and therefore the Fund, to greater risk and volatility than if the Master Fund’s
assets had been invested in a broader range of issuers. No assurance can be given that the
Master Fund’s investment program will be successful. An investment in the Fund should be
viewed only as part of an overall investment program.
An investment in the Fund is speculative and involves substantial risks. It is possible that
investors may lose some or all of their investment. In general, alternative investments such as
private equity or infrastructure involve a high degree of risk, including potential loss of principal
invested. These investments can be highly illiquid, charge higher fees than other investments,
and typically do not grow at an even rate of return and may decline in value. In addition, past
performance is not necessarily indicative of future results.
In addition to all of the risks inherent in alternative investments, an investment in the Fund
involves specific risks associated with private equity investing. Underlying funds and many
of the securities held by underlying funds may be difficult to value and will be priced in the
absence of readily available market quotations, based on determinations of fair value, which
may prove to be inaccurate. Fund investors will bear asset-based fees and expenses at the Fund
and Master Fund levels, and will also indirectly bear fees, expenses and performance-based
compensation of the underlying funds. Underlying funds will not be registered as investment
companies under the Investment Company Act of 1940, as amended (the “1940 Act”), and the
Master Fund’s investments in underlying funds will not benefit from the protections of the 1940
Act. The value of the Master Fund’s investments in underlying funds will also fluctuate and may
decline.
The Fund’s investment portfolio through the Master Fund will consist of primary and secondary
investments in private equity funds that hold securities issued primarily by privately held
companies (“Investment Funds”), co-investments, ETFs, cash and cash-equivalents. Many
of such investments involve a high degree of business and financial risk that can result in
substantial losses.
INVESTMENT PROGRAM RISKS
THE FUND’S PROSPECTUS PROVIDES A MORE COMPLETE DISCUSSION OF THE RISKS SUMMARIZED
BELOW.
• The Fund’s performance depends upon the performance of the Master Fund and the Investment
Fund managers and selected strategies, the adherence by such Investment Fund managers to
such selected strategies, the instruments used by such Investment Fund managers and the
Advisor’s ability to select Investment Fund managers and strategies and effectively allocate
Master Fund assets among them.
• The Fund’s investment portfolio through the Master Fund will consist of (i) Investment Funds
that hold securities issued primarily by privately held companies, (ii) co-investments, and (iii)
ETFs. Operating results for the portfolio companies in the Investment Funds and for the coinvestments during a specified period will be difficult to predict. Such investments involve a
high degree of business and financial risk that can result in substantial losses.
• The securities in which an Investment Fund manager may invest may be among the most
junior in a portfolio company’s capital structure and, thus, subject to the greatest risk of loss.
Generally, there will be no collateral to protect an investment once made.
• Subject to the limitations and restrictions of the 1940 Act, the Fund and the Master Fund may
borrow money for investment purposes (i.e., utilize leverage), to satisfy repurchase requests
and for other temporary purposes, which may increase the Fund’s volatility.
• Subject to the limitations and restrictions of the 1940 Act, the Master Fund may use derivative
transactions, primarily equity options and swaps, for hedging purposes. Options and swaps
transactions present risks arising from the use of leverage (which increases the magnitude of
losses), volatility, the possibility of default by a counterparty, and illiquidity. Use of options and
swaps transactions for hedging purposes by the Master Fund could present significant risks,
including the risk of losses in excess of the amounts invested.
• An Investment Fund manager’s investments, depending upon strategy, may be in companies
whose capital structures are highly leveraged. Such investments involve a high degree of risk
in that adverse fluctuations in the cash flow of such companies, or increased interest rates,
may impair their ability to meet their obligations, which may accelerate and magnify declines
in the value of any such portfolio company investments in a down market.
• Fund investors will bear multiple layers of fees and expenses: Asset-based fees and expenses
at the Fund and the Master Fund level, and asset-based fees, carried interests, incentive
allocations or fees and expenses at the Investment Fund level.
• The Master Fund is a non-diversified fund, which means that the percentage of its assets that
may be invested in the securities of a single issuer is not limited by the 1940 Act. As a result,
the Master Fund’s investment portfolio may be subject to greater risk and volatility than if
investments had been made in the securities of a broad range of issuers.
• Fund investors will have no right to receive information about the Investment Funds or
Investment Fund managers, and will have no recourse against Investment Funds or their
Investment Fund managers.
• Each of the Fund and the Master Fund intend to qualify as a Regulated Investment Company
(“RIC”) under the Internal Revenue Code, but may be subject to income tax liability if it fails
so to qualify.
• Due to the nature of the Master Fund’s underlying investments and the difficulty of estimating
income and gains, the Fund may be unable to accurately monitor compliance with investment
company tax requirements and be liable for an excise tax.
• The Master Fund invests in Investment Funds that are subject to risks associated with legal
and regulatory changes applicable to private equity funds.
• The Master Fund may invest a substantial portion of its assets in Investment Funds that follow
a particular type of investment strategy, which may expose the Master Fund, and therefore the
Fund, to the risks of that strategy.
• The Master Fund’s investments in Investment Funds, and many of the investments held by
the Investment Funds, will be priced in the absence of a readily available market and may
be priced based on determinations of fair value, which may prove to be inaccurate. Neither
the Advisor nor the Board of Directors of the Fund will be able to independently confirm the
accuracy of the Investment Fund managers’ valuations (which are unaudited, except at yearend). This risk is exacerbated to the extent that Investment Funds generally provide valuations
only on a quarterly basis. While such information is provided on a quarterly basis, the Fund will
provide valuations, and will issue units, on a monthly basis.
• A private fund investment involves a high degree of risk. As such investments are speculative,
subject to high return volatility and will be illiquid on a long-term basis. Investors may lose
their entire investment.
• Private equity fund managers typically take several years to invest a fund’s capital. Investors
will not realize the full potential benefits of the investment in the near term, and there will
likely be little or no near-term cash flow distributed by the fund during the commitment period.
Interests may not be transferred, assigned or otherwise disposed of without the prior written
consent of the manager.
• Private equity funds are subject to significant fees and expenses, typically, management fees
and a 20% carried interest in the net profits generated by the fund and paid to the manager.
Private fund investments are affected by complex tax considerations.
• Private equity funds may make a limited number of investments. These investments involve a
high degree of risk. In addition, funds may make minority investments where the fund may not
be able to protect its investment or control, or influence effectively the business or affairs of the
underlying investment. The performance of a fund may be substantially adversely affected by a
single investment. Private fund investments are less transparent than public investments and
private fund investors are afforded fewer regulatory protections than investors in registered
public securities.
• Private equity fund investors are subject to periodic capital calls. Failure to make required
capital contributions when due will cause severe consequences to the investor, including
possible forfeiture of all investments in the fund made to date.
No assurance can be given that the Master Fund’s investment program will be successful.
Accordingly, the Fund should be considered a speculative investment that entails substantial
risks, and a prospective investor should invest in the Fund only if it can sustain a complete
loss of its investment. An investment in the Fund should be viewed only as part of an overall
investment program.
PLEASE SEE THE PROSPECTUS FOR A MORE COMPLETE DISCUSSION OF THE RISKS ASSOCIATED
WITH INVESTING IN PRIVATE EQUITY AND ADDITIONAL SPECIFIC RISKS RELATING TO SECONDARY
INVESTMENTS, CO-INVESTMENTS AND ETFS.
Any statements regarding market events, future events or other similar statements constitute
only subjective views, are based upon expectations or beliefs, should not be relied on, are
subject to change due to a variety of factors, including fluctuating market conditions, and
involve inherent risks and uncertainties, both general and specific, many of which cannot
AMG PANTHEON FUND | PAGE 7
About AMG Funds
AMG Funds provides access to premier
asset managers through a unique
partnership where the investment
managers are truly independent.
AMG Funds is not beholden to a single
investment approach or a single
manager in delivering quality investment
solutions. This innovative approach
leverages each manager’s specific
expertise to deliver products that cover
the complete asset class spectrum.
Delivering the talents of all of these
portfolio managers under a consolidated
platform allows AMG Funds to offer
unmatched access to specialized
investment expertise.
Disclosures (continued)
be predicted or quantified and are beyond the Fund’s control. Future events and actual
results could differ materially from those set forth in, contemplated by, or underlying these
statements. In light of these risks and uncertainties, there can be no assurance that these
statements are now or will prove to be accurate or complete in any way. No representation
is made that the Fund’s or the Master Fund’s investment process or investment objectives
will be or are likely to be successful or achieved.
Nothing contained in this document is intended to constitute legal, tax, securities or
investment advice. The general opinions and information contained herein should not
be acted or relied upon by any person without obtaining specific and relevant legal, tax,
securities or investment advice.
The information in this document is supplied by Pantheon Ventures (US) LP, an affiliate of
AMG Funds LLC. AMG Funds LLC does not guarantee the accuracy of such information, but
believes it to be reliable. Additional information is available upon request.
Investment products are not FDIC insured, are not bank guaranteed and may lose value.
AMG Pantheon Fund is distributed by AMG Distributors, Inc., a member of FINRA/SIPC.
AMG Distributors, Inc. is a wholly owned subsidiary of Affiliated Managers Group (“AMG”)
and Pantheon Ventures (US) LP is majority owned by AMG.
INDEX DESCRIPTIONS
Unlike the Fund, indices are unmanaged, are not available for investment, and do not incur
expenses.
The S&P 500 Index is a capitalization-weighted index of 500 stocks. The S&P 500 Index is
designed to measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major indices. The S&P 500 Index is
proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights
reserved.
The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade
fixed-rate bond market, including both government and corporate bonds.
The Dow Jones U.S. Select REIT Index measures U.S. publicly traded Real Estate Investment
Trusts.
The Cambridge Associates U.S. Private Equity Index is based on data compiled from 970 U.S.
private equity funds (buyout, growth equity, private equity, energy and mezzanine funds),
including fully liquidated partnerships, formed between 1986 and 2010. The Cambridge
Associates U.S. Private Equity Index has limitations (some of which are typical to other
widely used indices) and cannot be used to predict performance of the Fund. These
limitations include survivorship bias (the returns of the index may not be representative of
all private equity funds in the universe because of the tendency of lower performing funds
to leave the index); heterogeneity (not all private equity are alike or comparable to one
another, and the index may not accurately reflect the performance of a described style);
and limited data (many funds do not report to indices, and the index may omit funds, the
inclusion of which might significantly affect the performance shown).
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© 2017 AMG Funds LLC. All rights reserved.
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