New York (HedgeCo.Net) – The Teacher Retirement System of Texas rose to first place in the ranking of private equity investments, the Private Equity Growth Capital Council (PEGCC) reported in its annual ranking of large public pension funds.
The Texas pension’s 10-year annualized private equity return was 18.2 percent, followed by the Massachusetts Pension Reserves Investment Trust (17.8 percent), and the Minnesota State Board of Investment (16.2 percent).
Other rankings and key findings include:
- Private equity delivered a 12.3 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 7.9 percent annualized return on its total fund during the same period.
- CalPERS currently invests the most capital ($32.3 billion) in private equity compared to all other pension funds in the country. CalSTRS and the Washington State Investment Board invests the second and third greatest amounts ($21.9 billion and $16.2 billion, respectively) to private equity funds.
- Based on the 150 pensions studied, private equity investment makes up 9.4 percent of total public pension fund investment.
“Over the long-term, private equity is the best performing asset class for pension funds,” Steve Judge, president and CEO of the PEGCC said.
“Our research shows that private equity is the only asset class that consistently beats the 8 percent target return that most public pensions set for their funds,” said PEGCC Vice President of Research Bronwyn Bailey. “Private equity’s outperformance helps to offset the volatility and lower returns of other asset classes and alleviate financial strain for the fund, their members, and the constituents who support them.”
Alex Akesson
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