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Top 10 Pensions Funds for Private Equity Returns

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A study of 155 U.S. public pension funds, released Thursday by the American Investment Council, shows that private equity outpaces all asset classes in long-term returns on investments.

As of June 30, 2015, private equity investments by public pensions yielded a median 10-year annualized return of 11.4%, compared with public equity’s 7.6%, real estate’s 6.3% and fixed income’s 5.2% returns, according to the research conducted by AIC in partnership with technology firm Bison.

“The data show that private equity is the standout asset class for public pensions over the long-term, and its allocation is critical to public pensions as they seek to meet their financial obligations,” AIC’s vice president of research and investor relations Bronwyn Bailey, said in a statement.

Bailey said that in an environment of low interest rates and public market volatility, “pension officials can turn to private equity as a source of stable, high returns for their beneficiaries.”

The study showed that public pensions invested 9.2% of their portfolios in private equity. They also invested 45.9% in public equities, 25.8% in fixed income and 8.2% in real estate.

Last year, 88% of the public pension funds in the study invested in private equity, with 53 allocating between 5% and 10%.

Following are the top 10 public pensions ranked for private equity returns and for investment volume, according to AIC. 

Top 10 Pensions Funds by Private Equity Returns (10-Year Annualized)

1. Teacher Retirement System of Texas: 15.4%

2. San Francisco Employees’ Retirement System: 15.2%

3. Iowa Public Employees’ Retirement System: 15%

4. Massachusetts Pension Reserves Investment Trust Fund: 14.8%

5. Houston Firefighters’ Relief and Retirement Fund: 14.7%

6. Minnesota State Board of Investment: 14.4%

7. Massachusetts Water Resources Authority Retirement System: 13.5%

8. Michigan Public School Employees’ Retirement System: 13.4%

9. Virginia Retirement System: 13.3%

10. New York State Teachers’ Retirement System: 13.2%

Top 10 Pension Funds by Private Equity Investment

1. California Public Employees’ Retirement System: $28.8 billion

2. California State Teachers’ Retirement System: $19.3 billion

3. Washington State Department of Retirement Systems: $17.8 billion

4. Teacher Retirement System of Texas: $16.4 billion

5. Oregon Public Employees Retirement System: $15 billion

6. New York State and Local Retirement System: $14.3 billion

7. State Teachers Retirement System of Ohio: $9.6 billion

8. Ohio Public Employees Retirement System: $9.1 billion

9. Florida Retirement System Pension Plan: $8.9 billion

10. New York State Teachers’ Retirement System: $8.3 billion


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