Government retirement funds are pumping record sums into private equity, defying concerns about risk and cost as they try to plug pension shortfalls.
U.S. pension funds’ private-equity investments swelled to an average 8.9% of holdings in 2021 after three years of straight growth, according to analytics company Preqin. That amounts to roughly $480 billion of state and local pension fund assets tracked by the Federal Reserve, up from about $300 billion in 2018.
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An example is when New York State Common Retirement Fund invested $340m in institutional investor-backed Capital Constellation, which takes stakes in growth-stage, specialist private-equity managers.
With this commitment, the New York State pension fund will become an equal partner in Capital Constellation alongside investors that include Alaska Permanent Fund Corp., the Public Institution for Social Security of Kuwait (“PIFSS”) and the British pension fund Railpen, according to Daniel Adamson, president of Capital Constellation.
Source: Wall Street Journal
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