Interest in Private Markets Strong Among Inst Investors

31 Jan

Interest in Private Markets Strong Among Inst Investors

Public pension plans in the United States and the United Kingdom tracked by eVestment, the global leader in institutional investment data and analytics, announced 215 new private equity mandate awards in 4Q 2018 and a total of 954 for 2018. This puts private equity investments in the No. 1 spot for new allocations among these public pensions for the past year. Private equity held the top spot for new public pension mandates in 2017 as well, with a total of 580.

The number of mandate awards was up substantially in 2018 compared to 2017. For the full year 2018, public plans monitored by eVestment announced 3,574 awards across a variety of asset classes, compared to 2,357 in 2017.

 

2018 1q18 2q18 3q18 4q18 total 2018 2018%
Private Equity 207 302 230 215 954 27%
Public Equity 115 141 195 271 722 20%
Direct RE 89 160 138 103 490 14%
Fixed Income 73 104 135 171 483 14%
HF / Multi-Asset 66 105 85 81 337 9%
Private Debt 63 76 74 83 296 8%
Real Assets 58 75 75 84 292 8%
Grand Total 671 963 932 1008 3574 100%

 

2017 1q17 2q17 3q17 4q17 total 2017 2017%
Private Equity 71 124 118 267 580 25%
Public Equity 136 142 110 115 503 21%
Direct RE 56 73 64 123 316 13%
Fixed Income 69 86 73 80 308 13%
HF / Multi-Asset 46 65 52 85 248 11%
Private Debt 28 39 53 91 211 9%
Real Assets 30 38 57 66 191 8%
Grand Total 436 567 527 827 2357 100%

 

Public plan mandate data for the past two years, which is as long as eVestment has been tracking it, has shown a consistent appetite for private equity among public pensions, with private equity capturing 27% of all the mandates awarded in 2018 and 25% in 2017.

Direct investment in real estate among public pensions surged in 2Q and 3Q 2018 (with 160 and 138 investments respectively), but fell off in Q4 (at 103), landing real estate as the No. 3 most popular new investment option for public plans for full-year 2018, capturing 14% of new mandates.

For both 2018 and 2017, equity investments captured the second highest percentage of investments for those years, at 20% and 21% respectively.

One implication of public pensions’ increased interest in private equity and private markets investments is the higher level of transparency public pensions require, a level of transparency which may be new to many of these managers.

“Public pensions have a variety of stakeholders to whom they are accountable when making investments,” said eVestment Global Director of Insights John Molesphini. “As a result, private markets and other alternative managers looking to win public plan assets increasingly need to comply with transparency and disclosure standards they may be less familiar with to win these mandates.”

Technology tools can help make that sharing of information easier and more efficient. For instance, eVestment Private Markets solutions allow investors and private markets investment managers to easily and securely share information as those investors compare the variety of private markets investment opportunities available to them.

eVestment tracks public pension plan trends via the company’s Market Lens solution. Market Lens offers users a searchable platform that provides access to a mandate database for U.S. and United Kingdom public pension plans. Market Lens provides board documents, including manager presentations, consultant recommendations, video presentations, fee schedules, upcoming allocation changes, private markets plans and more. There are currently more than 40,000 documents housed on the Market Lens database.