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.

 

20181q182q183q184q18total 20182018%
Private Equity20730223021595427%
Public Equity11514119527172220%
Direct RE8916013810349014%
Fixed Income7310413517148314%
HF / Multi-Asset6610585813379%
Private Debt637674832968%
Real Assets587575842928%
Grand Total67196393210083574100%

 

20171q172q173q174q17total 20172017%
Private Equity7112411826758025%
Public Equity13614211011550321%
Direct RE56736412331613%
Fixed Income6986738030813%
HF / Multi-Asset4665528524811%
Private Debt283953912119%
Real Assets303857661918%
Grand Total4365675278272357100%

 

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.