Approach
Patience is
a fee structure.
Most of what goes wrong in private wealth is a misalignment of incentives. We built the firm to remove it.
Woman Holding a Balance
Johannes Vermeer, c. 1664
01 — Philosophy
Three convictions, held for fifteen years.
Nothing here is novel. What is rare is a firm willing to be measured by it — through drawdowns, through fashions, and through long stretches when doing nothing is the correct decision.
Concentration over coverage.
A Varro portfolio typically holds between eighteen and twenty-five businesses. Each one is a position we would be comfortable owning if markets closed for a decade.
We would rather know a small number of companies thoroughly than own a little of everything and understand none of it.
A horizon measured in decades.
We underwrite every holding on a ten-year view. Annual turnover across our mandates has averaged under 12% since inception, which keeps trading costs and tax drag close to nothing.
We report to clients twice a year, in writing. There is no app.
Paid on results, never on size.
We do not charge a percentage of assets. The only fee we earn is a share of the returns we produce above a fixed hurdle, so our incentive is to grow your capital, not to gather more of it.
Every partner keeps the majority of their own liquid wealth in the same strategies, on the same terms.
02 — The fee model
No AUM fee. No account fee.
We take 15% of annual gains above a 6% hurdle. If a year falls short, we earn nothing. If a portfolio falls, we earn nothing until it has fully recovered past its previous high. Portfolios below $2M are not charged at all.
| A $10M portfolio in… | Return | Gain / loss | Typical 1% AUM fee | Varro fee | You keep, with Varro |
|---|---|---|---|---|---|
| A strong yearReturn clears the 6% hurdle by 3 points | +9.0% | $900,000 | $100,000 | $45,000 | $855,000 |
| A modest yearReturn below the hurdle | +4.0% | $400,000 | $100,000 | $0 | $400,000 |
| A difficult yearHigh-water mark applies until recovered | −8.0% | −$800,000 | $100,000 | $0 | −$800,000 |
| Fees across all three years | $300,000 | $45,000 |
How do you make money in a flat year?
We don't. If a portfolio returns less than 6% in a calendar year, Varro earns no fee for that year. The firm is capitalised to operate through several such years in a row; partners take a modest salary and the remainder of their compensation is deferred and paid in Varro strategies.
What is a high-water mark?
It is the highest value your portfolio has reached at any year end, net of withdrawals and contributions. After a decline, we charge nothing until the portfolio has climbed back above that mark. We are never paid twice for recovering the same ground.
Why is there no fee below $2M?
Because the families who begin with us small tend to stay the longest. Several of our largest mandates today started below that threshold. We would rather earn their trust early than a fee early.
Who holds the assets?
Your assets remain in your own name with an independent, regulated custodian of your choosing. Varro holds a limited trading mandate only. We can never withdraw funds, and you can see every position and transaction directly with the custodian at any time.
Can I leave, and what does it cost?
You can end a mandate with thirty days' written notice. There are no exit fees, lock-ups or penalties. Any performance fee is calculated pro rata to the date of departure, and only if it has been earned.