New Report Ranks Top 10 Pension Funds by Private Equity Returns and Allocations
Private equity returns to large public pension funds continue to outperform all other asset classes over 10-year time horizons, according to new PEGCC data.
The study examines 146 U.S. public pension funds with assets greater than $1 billion, analyzes the asset allocation of these funds, and compares the performance of their private equity investments to other asset classes.
Click the links to view a new infographic, our interactive map with more information on how private equity strengthens pension funds, or view the full report below.
The analysis is broken down into four main categories. Highlights from each category are below.
- Top 10 Pensions by PE Returns (%): The report found that the Massachusetts Pension Reserves Investment Trust (PRIT) maintained the highest private equity performance, followed by the Los Angeles County Employees Retirement Association and the Teacher Retirement System of Texas. The rankings are based on 10-year and 5-year annualized returns by pensions’ private equity investments.
- Top 10 Pensions by PE Allocation ($): CalPERS has invested the most capital ($34.2 billion) in private equity compared to all other pension funds in the country. CalSTRS and the Washington State Department of Retirement Systems allocated the second and third greatest amounts ($22.6 billion and $16.1 billion, respectively) to private equity funds.
- Pension Asset Allocation: Based on the pensions studied, the report found that private equity investment makes up 10.3 percent of total public pension fund investment, compared to 9.6 percent from last year’s PEGCC report. Private equity is the third most invested asset class behind public equity and fixed income.
- Pension Returns by Asset Class: Private equity delivered a 10 percent annualized return to the median public pension over the last 10 years, more than any other asset class. By comparison, the median public pension received a 6.5 percent annualized return on its total fund during the same period.
The report is compiled using information from publicly available 2012 annual financial reports and quarterly reports from the 146 largest public pension funds. Private equity returns are reported net of management fees and carried interest. Performance calculations for other asset classes include returns that are both gross and net of fees on marketable securities.
