Nearly three-quarters (74%) of US pension plan managers are anticipating a rise in private equity distributions over the next three years, according to a report by Banking Exchange citing a new survey by financial software specialist Ortec Finance.
Opinion though, is divided on the primary advantage of private asset investments.
The survey found that 40% of pension managers cite returns and illiquidity premiums as the main reason for investing in private assets, while 34% prioritise diversification and 26% see inflation protection as the key benefit.
Despite growing interest in private assets, pension managers differ on optimal allocation levels. Half (50%) believe the ideal allocation falls between 20% and 30%, while 34% favour 30% to 40%, 6% prefer 40% to 50%, and 10% opt for a more conservative 10% to 20%.
The expected increase in private equity distributions follows a period of low payouts in recent years. Among those forecasting higher distributions, 38% expect a significant rise, while 36% predict a slight increase. Meanwhile, 12% foresee a decline, and 14% believe distributions will remain steady.
These expectations play a key role in pension funds’ investment pacing strategies, with 90% of managers stating that their views on distributions influence allocation decisions. Of those, 26% see a significant impact, while 64% anticipate a moderate effect.