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Private Equity Outperformance: Insight into Returns at Top US Pension Funds

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November 7, 2013

PEGCC or the Private Equity Growth Capital Council, an advocacy group for the PE industry, released a new study about US public pension funds and their private equity portfolios. It took 10-year time horizons and looked at publicly available info on 146 pension funds with assets greater than USD 1 bn.

 

Top 3 Pension Funds by PE Returns:  Massachusetts Pension Reserves Investment Trust (PRIT) was number one, 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 (USD 34.2 billion) with CalSTRS and the Washington State Department of Retirement Systems coming in at second and third greatest amounts (USD 22.6 billion and USD 16.1 billion, respectively) to private equity funds.

 

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, says PEGCC. By comparison, the median public pension received a 6.5 percent annualized return on its total fund during the same period.

 

PEGCC noted that PE 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.

 

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