Inst Investors Continue Interest in Private Equity, Real Assets

25 Oct

Inst Investors Continue Interest in Private Equity, Real Assets

U.S. public pension plans tracked by eVestment’s Public Plan IQ made 72 investment commitments to private equity funds in Q3 2017, the No. 1 allocation choice for these public plans during the quarter. Allocations to real assets came in at No. 2, at 66 during Q3 2017. Public Plan IQ’s Q3 results mirror allocation trends seen in the past few quarters (see charts below).

These recent allocations represent a small fraction of the trillions of dollars institutional investors invest across traditional and alternative asset classes. However, they highlight how these asset classes are increasingly gaining favor with public pensions and other institutional investors.

 

Q3 2017 Public Pension Plan Investment Commitments

Investment Type                                    No. of Commitments

Private Equity72
Real Assets66
Private Debt36
Equity27
Fixed Income14
Hedge Fund10
Multi Asset10
Private Equity – Fund of Funds2
Hedge Fund – Fund of Funds1
Real Assets – Fund of Funds1

 

2Q 2017 Public Pension Plan Investment Commitments

Investment Type                                    No. of Commitments

Real Assets85
Private Equity72
Equity34
Private Debt31
Hedge Fund12
Fixed Income11
Multi Asset11
Private Equity – Fund of Funds3

 

Q1 2017 Public Pension Plan Investment Commitments

Investment Type                                    No. of Commitments

Real Assets69
Private Equity68
Equity28
Private Debt27
Fixed Income16
Hedge Fund12
Multi Asset5
Private Equity – Fund of Funds5
Hedge Fund – Fund of Funds2
Real Assets – Fund of Funds1

 

Public pension plans’ increased interest in and allocations to private equity, real assets and other private markets asset classes will bring systemic changes to the industry. For instance, managers who hope to exploit this interest and capture these commitments will have to adjust their procedures in several areas, including due diligence, reporting and compliance, to meet the reporting and transparency needs of institutional investors.

“Despite debate in the market that there is too much money chasing deals, the latest data for the quarter just ended shows no signs of U.S. public plans reducing their new commitments to private equity,” said Graeme Faulds, eVestment’s Director of Private Market Solutions. “Smart fund managers are using services like eVestment to identify what public plans are looking for in advance of any due diligence process and capitalize on the demand.”

Tools like eVestment’s TopQ software solution can help investors, consultants and private markets investment managers streamline the due diligence processes and give private markets investment firms the transparency they need to win commitments from these public plans.

Public Plan IQ is the leading research service for aggregating the competitive intelligence of U.S. state and local government pension plans. For more information about Public Plan IQ, please visit https://www.evestment.com/products/public-plan-iq/.

TopQ is eVestment’s private markets performance analytics solution that offers limited and general partners a sophisticated and configurable tool to more efficiently conduct quantitative due diligence and fund analysis, securely distribute track records and easily monitor the performance of private equity funds and portfolios. For more information on this solution, please visit https://www.evestment.com/products/topq/.