Some U.S. pension funds, including Maryland's $65B retirement system and Alaska's $77B state fund, are planning to reduce allocation to private equity investments.
The latter is planning to cut private equity investments altogether. Investment consulting firm Callan's senior vice president Greg DeForrest advised its client Mendocino County pension fund not to invest in private equity.
He told the board, "Without private equity, you don't have to deal with the costs, the fees, the administrative headache, and the reporting headache associated with it."
- DeForrest recommended alternatives such as public market assets, real estate, and infrastructure.
- Pension funds are lowering their commitments to PE because they anticipate a further decline in the value of private assets.
- Last week WSJ learned that Tiger Global's venture capital portfolio lost 33% value, equating to nearly $23B, in 2022.
- Preqin's data shows that despite a year of losses, private equity portfolios demonstrated 10.8% returns on average, well above their target of 10%.
