ICYMI: Private Equity Strengthens Public Pensions Across America
Public pension managers across our country choose private equity investment because it outperforms other asset classes and is a responsible way to diversify their portfolio. By delivering median 10-year annualized returns of over 8.6%, the private equity industry is strengthening the pensions of public sector workers across America.
Here’s a quick look at coverage from only the past two months about how private equity investments are delivering strong returns for public pensions in Washington state, Pennsylvania, Virginia, and Louisiana.
“Washington State Investment Board’s $101.3 billion commingled trust fund returned a net 10.04% for the fiscal year ended June 30, topping its custom benchmark by 37 basis points, a report on the Olympia-based board’s website said.”
“By asset class, the best-performing asset class for the fiscal year ended June 30 was private equity, which returned a net 15.85%.”
“Pennsylvania Public School Employees’ Retirement System, Harrisburg, posted a net return of 9.3% for the fiscal year ended June 30, said a news release issued by the $56.7 billion pension fund. This exceeded the pension fund’s 7.25% annual return assumption.”
“PennPSERS’ chief investment officer James H. Grossman Jr., said in the news release that the pension fund’s ‘fiscal-year performance was driven by very strong performance in private equity, U.S. equity, non-U.S. equity, private real estate and private credit.”
“Private equity investments help increase fund’s market value to $78.6 billion.”
“The Virginia Retirement System (VRS) returned 7.5% for the fiscal year ending June 30, surpassing its 7% assumed rate of return, but falling just short of the benchmark return of 7.7%. The performance raised the market value of the system’s pension fund to a new high of $78.6 billion, up from $74.4 billion at the same time last year.”
“Private equity was by far the VRS’s top-performing asset class, returning 15.8%, followed by public equity and real assets, which earned 9.7% and 9.5%, respectively.”
“Louisiana Teachers’ Retirement System, Baton Rouge, returned a net 11.56% for the fiscal year ended June 30, the $21 billion pension fund announced in a news release on Tuesday.”
“The best-performing asset class for the fiscal year ended June 30 was domestic equities, which returned a net 16.76% (above its 14.78% benchmark), followed by alternative assets and real estate, which returned a net 13.38% (above its 12.2% benchmark).”
Earlier this year, the American Investment Council released its 2018 Public Pension Study, which analyzed investment returns by 163 U.S. public pension funds and highlights how private equity continues to outperform other asset classes. The study shows private equity continues to lead all asset classes in long-term investment performance, with private equity’s median 10-year annualized return of 8.6 percent surpassing public equity’s 6.1 percent, fixed income’s 5.3 percent, and real estate’s 4.7 percent. Our study also named the 10 funds with the highest private equity returns: