Most fund-of-funds structures charge two layers of fees for the privilege of diluted conviction. Matthew Schissler of Paradise Valley skipped that model. His funds invest directly in companies, which means the research matters, the decision is final, and there is no intermediary smoothing over the mistakes.
Direct investing at the small and mid-cap level is not the path of least resistance. It requires more diligence, more active management, and more tolerance for being wrong without a portfolio construction formula to absorb the impact.
Schissler has also built direct ownership stakes in private companies across sectors, including a commuter airline, an insurance company, and boutique fitness franchises. The common thread is ownership, not exposure.
What Gets Lost in the Fund-of-Funds Layer
When capital passes through a fund of funds, the manager of that fund is making allocation decisions on your behalf. Some of those decisions are based on information you would want to evaluate yourself. Some are based on relationships and fee structures you are not seeing.
The layer also creates distance from the underlying companies. You own a percentage of a fund that owns a percentage of a fund that owns shares in companies. At that distance, you cannot meaningfully evaluate what you own.
What Direct Investing Requires
The discipline required for direct investing is different from what most portfolio structures demand. You have to be willing to pass on deals that do not meet the standard, even when there is pressure to deploy capital. You have to be able to hold a position through volatility without a fund committee to defer to.
You also need to understand the business you are buying, not just the financials. For Schissler, that means engaging at the board and C-suite level, which his background in advisory and director roles makes practical.
Private Ownership as an Extension of the Same Logic
Schissler’s private investments follow the same principle. A commuter airline is operationally intense and margin-thin. An insurance company is regulatory-heavy and capital-sensitive. Boutique fitness franchises are locally dependent and management-driven. None of those are passive.
Part-ownership in those businesses gives him operating-level insight that informs how he thinks about public company investments. You understand capital cycles differently when you have been inside a business that lives and dies by them.
The Accountability That Comes With Direct Decisions
One thing that changes when you invest directly is accountability. There is no fund manager to point to. The thesis was yours. The diligence was yours. The decision was yours.
That accountability is not a burden in Schissler’s framework. It is the point. He has also served in founding, advisory, director, and executive roles, which means he has been on the receiving end of investor decisions and knows what it looks like when an investor is engaged versus absent.
The fund-of-funds model works well for certain purposes. But it is designed for exposure, not ownership. For Schissler, the distinction matters.
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