Investments in venture capital among the top 200 U.S. defined benefit plans increased 19%, to $19.4 billion, and other private equity rose 2.7%, to $84.6 billion, in the 12 months ended Sept. 30, according to Pensions & Investments' annual survey of the nation's largest retirement plan sponsors.
Distressed debt dropped 12%, to $5.2 billion, a sharp contrast to the year-earlier survey when distressed debt investment grew 55% to $5.9 billion. The drop in that category was the result of realizing some of the gains made.
P&I's special report surveys the nation's largest 200 plan sponsors; the private equity and other alternative assets reflect investments only by defined benefit plans.
"Bottom line is that our distressed debt managers had a very strong year. As a result, they sent the (limited partners) back a lot of money, which reduced our overall distressed holdings," said Brad Pacheco, spokesman for the California Public Employees Retirement System, Sacramento. CalPERS' investment in distressed debt dropped 38.7% to $322 million.
On the other hand, CalPERS' venture capital investments, which had a relatively steady year, increased 26.2% to just less than $1.7 billion, Mr. Pacheco said.
"The venture companies improved, but we weren't necessarily flooded with distributions — that won't happen until the IPO markets are back in earnest," he said.