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Laxman Pai, Opalesque Asia: Among 228 U.S. plans managing $4 trillion, the number of private equity commitments alone growing 22.5% from 2020 to 2021, said a study.
The Nasdaq eVestment Asset Allocation Report points to the growing appetite for private alternatives since 2017, which has put pressure on public equity mandates and in the case of private equity, puts allocations beyond targets.
While recent drawdowns on public equities have also contributed to this increase, a re-adjustment to target allocation ranges may result in an eventual slowdown in commitments, it said. The analysis of U.S. public pension plans through the end of 2021 revealed meaningful differences in allocations against targets across private alternatives and fixed income asset classes.
Meanwhile, U.S. public plans were broadly underweight to fixed income, private debt, real assets, and hedge funds entering 2022. Fixed income and private debt were underweight by 1.2% and 0.2%, respectively, translating into potential flows of $47.2 billion and $6.9 billion into the asset classes. Under-allocations in this space may signal a lucrative opportunity for managers to attract AUM.
Public plans' public equity exposure averaged 44.3% and was neutral weight against their target allocations through 2021. The rise in private alternatives allocations has come at the expense of public equity allocations, with the latter decreasing every year since 2017.
The number of commitments and the dollars co...................... To view our full article Click here
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