I think PE is more about keeping liabilities low (increases "expected return" used for discounting) as trying to get genuinely high returns. I mentioned this (it's not an original idea of mine) in my Policy Brief for the Reason Foundation and gave an example: "in 2015, the chief investment officer (CIO) of Idaho’s Public Employee Retirement System, Bob Maynard, with rare and admirable candor, described Idaho as “skeptical” of private equity but referred to the “phony happiness” that results from actuaries and accountants accepting numbers that “actually do have consequences for actual [near-term] contribution rates.” He stated that “even if [Private Equity] just gave public market returns, we’d be in favor of it because it has some smoothing effects on both
I think the shift into alts is mostly bc they can't say "Oh yeah, we can discount at 8%" with a straight face if it were 60/40 public equity/public bonds.
Now, if the valuation of liabilities were divorced from the investment policy.... ;)
Might a future big payday have something to do with the large investments in private equity?: https://www.ai-cio.com/news/former-connecticut-treasurer-named-chief-public-pension-strategist-at-apollo-global-management/
I think PE is more about keeping liabilities low (increases "expected return" used for discounting) as trying to get genuinely high returns. I mentioned this (it's not an original idea of mine) in my Policy Brief for the Reason Foundation and gave an example: "in 2015, the chief investment officer (CIO) of Idaho’s Public Employee Retirement System, Bob Maynard, with rare and admirable candor, described Idaho as “skeptical” of private equity but referred to the “phony happiness” that results from actuaries and accountants accepting numbers that “actually do have consequences for actual [near-term] contribution rates.” He stated that “even if [Private Equity] just gave public market returns, we’d be in favor of it because it has some smoothing effects on both
reported and actual risks.”
I think the shift into alts is mostly bc they can't say "Oh yeah, we can discount at 8%" with a straight face if it were 60/40 public equity/public bonds.
Now, if the valuation of liabilities were divorced from the investment policy.... ;)