Blackstone favoured by pension funds

Over half of the 50 chief investment officers surveyed would consider allocating capital to Blackstone versus 17 other firms and the firm was also cited most frequently as the firm most managers would choose if they could only allocate to one firm. Six of the top eight firms to which these managers would allocate capital were private equity firms. While brand recognition plays a big part when pension funds are selecting which private equity funds to invest in, return expectations are a reasonable 10% to 15%, far lower than what the private equity firms have achieved in past years.

The research also revealed that private equity allocation looks set to surpass both hedge fund and real estate allocations within three years. At present, real estate followed by hedge funds comprise the largest two allocations within the alternative asset pool. Based on three-year target allocations of pension managers, the survey revealed private equity allocations should grow to 33% of the total alternatives allocation, larger than both real estate and hedge funds. Pension funds are predicted to allocate an additional US$1.2trn to alternative assets over the next three years. New money flows will be mainly comprised of US$400bn into private equity, US$370bn into real estate, US$290bn into hedge funds and US$160bn into other categories (including commodities, energy and timber.)