With pension fund investments, private equity pays off
26th Jun 12
In this article, Keith Larson and Ted Wheeler of the Oregon Public Employees Retirement Fund talk about the fund’s strategy to deliver value to its members by investing in private equity.
Since 1981, private equity has been the fund’s top performer: if Oregon had not invested in private equity over the past decade and instead put the money in the stock market, it would have had $4 billion less in earnings, or $400 million less every year – the equivalent of losing 4,000 teachers per year.
Over the past decade, about 71% of the money needed to pay for benefits came from investment-generated income: a large part of which was attributable to Oregon's decision to invest in private equity.
“We are unanimous in our belief that the trade-offs of private equity are worth it for Oregon and are key to the sustainability of PERS,” say the authors.
“The performance of these investments strengthens our ability to fund schools, public safety and other critical services, with less money coming out of taxpayers' pockets.”