Pension funds are lagging more sophisticated asset managers when it comes to allocation to private equity, according to new research by the London Business School’s Coller Institute and Adveq, (based on 1,208 US and UK pension funds’ annual reports).
The study claims to be the “first empirical, academic analysis of pension funds’ private equity allocations”. Allocations to the asset class have grown significantly, but they are still lagging behind other more experienced or well-staffed investor categories, says the study.
From 2005 to 2012 public pension funds’ allocations to private equity have increased, on average, from 4.5% to 5.64%. Allocations from private pension funds have increased, on average, from 4.99% to 5.33% but their activity has not been as great as more sophisticated or experienced investor groups, such as family offices and sovereign wealth funds, which have actually doubled their percentage capital allocations to private equity between 2007 and 2012. (Image Source: Coller Institute/Adveq)