03 Oct 2016
- Pension funds account for almost a third of capital raised by Europe’s private equity and venture capital funds over the last three years, Invest Europe data shows
- With allocations set to increase, new guide helps pension funds understand how the asset class operates and how to approach investing
At a time when many investors are seeking to increase their allocations to private equity and venture capital, Invest Europe has today published a new guide for pension funds on investing in the asset class. The Guide to Private Equity and Venture Capital for Pension Funds contains practical information on why to invest and how to do so, plus an overview of the benefits and risks of gaining an exposure to private equity and venture capital. It is aimed at helping pension funds with limited experience of the asset class achieve an understanding of its unique features.
“Pension funds considering investing in private equity and venture capital can find it hard to locate simple guidance on matters such as how to build a portfolio of investments, measure performance and manage risk,” said Michael Collins, the new Chief Executive of Invest Europe. “We’ve produced this guide following research undertaken by Greenwich Associates on our behalf in 2014, which showed that while a third of pension funds were seeking to increase their allocations to private equity over the next few years, the information sources available to them were quite limited.”
Drawing on the experience of long-standing investors in the asset class, such as Ilmarinen Mutual Pension Insurance Company, APG Asset Management, SPF Beheer and Stichting Pensioenfonds TNO, the publication shows, via case studies, how pension funds can manage their portfolios and exposure to private equity and venture capital. It also sets out the different points of access available to investors and outlines the areas pension funds need to consider, such as how to select managers and gain adequate portfolio diversification.
Pension funds are an important source of capital for Europe’s private equity and venture capital funds, accounting for almost a third of funds raised over the last three years, according to Invest Europe data. The most commonly-cited reason for pension funds to invest in the asset class was returns, according to the Greenwich Associates research, with the largest proportion expecting an outperformance of between 3% and 6% over public market returns.
“Many studies suggest that institutional investors – including pension funds – are increasingly turning to alternative investments, such as private equity and venture capital,” said Iain Leigh, Managing Director, Global Private Equity at APG Asset Management. “They are doing so to generate returns in a persistently low interest rate environment but also because the long-term nature of the asset class offers a good match for long-term liabilities, while providing diversification benefits. Yet many pension funds find it challenging to source information about private equity and venture capital. This new guide aims to address this issue.”
European private equity and venture capital are an attractive investment choice for investors. Over the last three years, fundraising in the asset class has increased by 70%, compared with 2010-2012, according to Invest Europe figures, with €48bn raised in 2015 alone.
“Delivering straightforward, useful information about private equity and venture capital is at the heart of Invest Europe’s mission, so I am pleased to launch it on my first day as CEO,” added Michael Collins. “Invest Europe already represents over 100 investors in private equity and venture capital funds. Hopefully this guide will help more pension funds to join them and deliver the benefits of strong returns and portfolio diversification to the pensioners they serve.”
The guide is available via the Invest Europe website.
Media enquiries For more information please contact
Elena Díaz Ureta
Communication Manager – Media & External Relations
Most PCs automatically accept them but you can change your browser settings to restrict, block or delete cookies if you want. Each browser is different, so check the 'Help' menu of your particular browser (or your mobile phone's handset manual) to learn how to change your cookie preferences. Many browsers have universal privacy settings for you to choose from.
Cookie settings in most versions of Internet Explorer can be found by clicking the tools option and then the privacy tab.
Cookie settings in Firefox are managed in the Options window's Privacy panel. See Options window - Privacy Panel for information on these settings.
Click on the spanner icon on the toolbar, select settings, click the under the bonnet tab, click on content settings in the privacy section.
You can manage cookies in Opera if you Click on settings, then Preferences, then Advanced and finally Cookies
Choose Safari, then preferences and then click security. You should then be able to specify if and when Safari should accept cookies.
To manage cookies on your mobile phone please consult your manual or handbook.
If you decline cookies, some aspects of Invest Europe site may not work on your computer or mobile phone and you may not be able to access areas you want on the website. For this reason we recommend that you accept cookies.
If you delete all your cookies you will have to update your preferences with us again and some aspects of our site may not work.
If you use a different device, computer profile or browser you will have to tell us your preferences again.
If you'd like to learn more about cookies in general and how to manage them, visit aboutcookies.org.
We can't be responsible for the content of external websites.Opt-out of cookies