Portfolio Construction: Private Equity Subclass

MFPE Target Sub-Asset Class Allocations
as a % of committed capital

Venture Capital: Targeting 35% of total committed capital.

• MFPE emphasizes investments in proven, established venture capital partnerships focused on early-stage information technology and, to a lesser extent, healthcare investments.
• Exposure to later-stage venture capital funds is on a select basis.
• Early-stage venture-backed companies that have successfully developed new and disruptive technologies, products and services addressing large markets have historically produced superior returns.
• MFPE believes that early-stage venture capital funds managed by the most seasoned, experienced early-stage technology and life science investors will continue to provide the opportunity for attractive returns going forward.

• MFPE emphasizes investments in control-oriented buyout partnerships, in particular middle-market partnerships managed by sponsors with a demonstrated ability to improve portfolio company operations and cash flow.
• To a lesser extent, there is some exposure to larger buyout funds with similar attributes.
• MFPE believes that a demonstrated ability to meaningfully improve revenue growth and profitability of portfolio company operations is a critical component to any private equity portfolio.

• MFPE emphasizes investments in special situations partnerships with focused strategies including mezzanine, distressed/restructuring and industry-focused partnerships.
• MFPE believes that highly focused special situation strategies can deliver private equity returns which are relatively uncorrelated with the returns for buyout and venture capital strategies.
• Examples of strategies MFPE emphasizes include: equity-oriented mezzanine sponsors with preferred access to high-quality investment opportunities, distressed company investors with a control orientation and the operational capabilities for active turnaround management, and specialist investors with highly focused domain expertise in energy or other asset-based industries.

• MFPE emphasizes investments in established private equity managers in developed economies with a proven, successful track record of private equity investment.
• Commitments outside of the U.S. are primarily with Western European-based, middle-market private equity managers.