Private Equity - who are the biggest investors?

[MarkR]

We’ve had some Private Equity discussions here, mostly in the context of how evil they are. So I was curious, where does most of the PE money come from? Who are their biggest investors. And surprisingly, some of the biggest investors are organizations that people who consider PE to be evil think are really good organizations. Seems odd, or maybe they just didn’t know, or don’t want to know. Here’s the list:

• Canada Pension Plan Investment Board (CPP Investments)
• Kuwait Investment Authority (KIA)
• California Public Employees’ Retirement System (CalPERS)
• Yale University Endowment
• Hong Kong Monetary Authority (HKMA)
• Public Sector Pension Investment Board (PSP Investments, another large Canadian pension company)
• Harvard Management Company (HMC, the Harvard University endowment)
• Abu Dhabi Investment Authority (ADIA)
• National Pension Service (NPS) of South Korea
• Teacher Retirement System of Texas (TRS)
• Washington State Investment Board (WSIB)

[steve203]

@MarkR

We’ve had some Private Equity discussions here,

Seems those agencies have a fiduciary duty to seek the highest returns for their clients. Probably not a stretch to expect that the PE looting model provides a higher return than trying to actually run a company to be sustainable.

Steve

[intercst]

@steve203

Seems those agencies have a fiduciary duty to seek the highest returns for their clients.

But are they regularly getting higher returns for their clients versus a low-cost index fund? Warren Buffett’s hedge fund challenge says, “No”.

Buffett's Bet with the Hedge Funds: And the Winner Is …

It’s very hard to overcome, “The 2% of assets, plus 20% of the profits” annual fee.

As Warren explained, “None of these guys, plus the succeeding generations of their families will ever need to work a day”, with that level of “skim”.

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[intercst]

@MarkR

Teacher Retirement System of Texas (TRS)

This does not surprise me. When I lived in Houston more than 20 years ago, the Teachers were required to invest in VALIC high fee variable annuities (with a 3% annual fee) as their only retirement option.

I always wondered, “Couldn’t one of the math teachers explain how much they were getting screwed?”

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[rainphakir]

@intercst

retirement option.

I always wondered, “Couldn’t one of the math teachers explain how much they were getting screwed?”

This goes back to my comment:

@rainphakir

My coworkers were(are) post grad educated (many PhD) and had the same issues Darryl describes: didn’t check the box, got advice from vulture financial planners, high fee MFs n ETFs etc.

It’s a lack of financial education, not “blue collar” or “white collar”.

They might be math teachers. But they don’t “do” finance. They can explain “math”, but can’t apply it to retirement finances.

The economics folks… Same thing.
They don’t “think” in terms of retirement.

In addition, there’s pressure to NOT “give financial advice”… As in: “You don’t have the certificates. You’ll be illegal, fired, and sued.”

ralph

[intercst]

@MarkR

We’ve had some Private Equity discussions here, mostly in the context of how evil they are. So I was curious, where does most of the PE money come from? Who are their biggest investors. And surprisingly, some of the biggest investors are organizations that people who consider PE to be evil think are really good organizations.

I’m pretty sure it’s all Ivy League educated endowment managers sending commission checks to their fellow “Skull & Bones” members.

Skull and Bones

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