Why do pensions, university endowments and charitable foundations invest in private equity?
The primary investors in private equity are pension funds, university endowments and charitable foundations. It is private equity’s outperformance of the S&P 500 over short and long time horizons makes the asset class an especially attractive investment for these investors. The consistent private equity outperformance of public markets is essential for pension funds, university endowments and charitable foundations to achieve their investment goals.
According to a recent analysis from the Private Equity Growth Capital Council private equity investments outperformed the S&P 500 for the 1,5, and 10-year time horizons by 7.1, 5.7 and 7.6 percentage points. Private equity investments delivered similar returns to public pensions. The PEGCC analysis showed that pension fund investments in private equity exceeded the S&P 500 for 1, 5 and 10-year time horizons by 9.1, 7.9 and 8.6 percentage points.
Returns from private equity support the financial security of millions of average Americans that rely on pensions, endowments and foundations. Private equity’s outperformance of public markets helps provide retirement security to millions, makes college a reality for more students and funds charitable causes.
