MassPRIM and Ohio School fund lead private equity returns

A recent study of American public pension plans shows private equity investments can help boost returns over the long haul.

The American Investment Council's list of top-performing private equity portfolios showed Massachusetts Pension Reserves Investment Trust, managed by the more commonly known MassPRIM, and Ohio School Employees Retirement System led the group with annualized 10-year returns of 13.63% and 13.3% as of June 30, 2018, respectively.

The median 10-year private equity return of the 165 observed plans was 10.2%, 1.7 percentage points above the median public equity return over the same period, while the median total plan return was 6.7%.

CalPERS and the Teacher Retirement System of Texas had the largest dollar allocation to private equity, investing $27.2 billion and $21.2 billion, respectively, in private equity funds. Ohio School Employees was the only plan within the 10 largest by assets to also be among the top performers.

MassPRIM recently reported its private equity allocation returned 18.5%, gross of fees for the year ended June 30, well ahead of the 4.5% gross return of its public equity basket.

AIC also noted in its report that 91% of U.S. public pension plans allocate to private equity and have dollar-weighted average allocation of 8.7%.