US public pension plans tracked by eVestment’s Public Plan IQ made 72 investment commitments to private equity funds in Q3 2017, the No1 allocation choice for public plans during the quarter.
Allocations to real assets came in at No2, at 66 during Q3 2017. Public Plan IQ’s Q3 results mirror allocation trends seen in the past few quarters.
These recent allocations represent a small fraction of the trillions of dollars institutional investors invest across traditional and alternative asset classes. However, they highlight how these asset classes are increasingly gaining favoru with public pensions and other institutional investors.
Public pension plans’ increased interest in and allocations to private equity, real assets and other private markets asset classes will bring systemic changes to the industry. For instance, managers who hope to exploit this interest and capture these commitments will have to adjust their procedures in several areas, including due diligence, reporting and compliance, to meet the reporting and transparency needs of institutional investors.
“Despite debate in the market that there is too much money chasing deals, the latest data for the quarter just ended shows no signs of US public plans reducing their new commitments to private equity,” says Graeme Faulds, eVestment’s Director of Private Market Solutions. “Smart fund managers are using services like eVestment to identify what public plans are looking for in advance of any due diligence process and capitalise on the demand.”
Tools such as eVestment’s TopQ software solution can help investors, consultants and private markets investment managers streamline the due diligence processes and give private markets investment firms the transparency they need to win commitments from these public plans.
