Alternative Investments/Private Equity: Record Returns At Some Large Pension Funds Driven By Private Equity

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In some cases, the returns on private equity holdings have surpassed even those from public equities.

The past fiscal year has been notable for the record returns generated by some of the top public pension funds in the US and abroad. What’s interesting is that many of these superlative gains were propelled by private equity investments that put even public stock returns in the shade. (CIO)

Here’s a table that shows off these numbers:

Name of fund Size ($, B) Period Net return % PE return % Public Equity %
California Public Employees’ Retirement System (CalPERS) 469 June 30 21.3 43.8 36.3
California State Teachers’ Retirement System (CalSTRS) 308.6 FY 20-21 27.2 51.9 41.8
Maryland State Retirement and Pension System (MSRPS) 67.9 FY 20-21 26.7 51.85 44.54

Pension funds: Longer term results

Private equity has also been a stellar performer at the Public Employees’ Retirement System of Mississippi. During the past financial year the asset class returned 58.87%. Moreover, it generated 24%, 21.72%, and 16.61%, respectively, on an annualized basis, over the past three, five and 10 years, and was the pension fund’s top gainer in each of those years.

Even at CalPERS’ private equity has been the highest returning asset class over longer periods, with 10-year annualized return of 12.0% and 20-year annualized return of 10.1%.

At CalSTRS too private equity has outperformed all other asset classes over the past three, five and 10 years, as shown below.

“We’ve built our portfolio for long-term performance, but this year’s results were nothing short of spectacular,” said CalSTRS Chief Investment Officer Christopher J. Ailman in the results announcement. “These are record-breaking numbers—the highest returns we’ve seen since the late 1980s. Positive fund performances like this will help ensure we have a strong and reliable funding source for our educators and their beneficiaries for years to come.”

Related Story:  Gatwick Airport: An infrastructure investment that paid off handsomely for CalPERS

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