(June 21, 2012) — North America-based endowments are stepping up their allocation to private equity, a study by Preqin shows.
According to its research, these institutions have remained committed to private equity investment, with 94% intending to increase or maintain their exposure to private equity in the longer term. Over half (58%) of North America-based endowments expect to make their next private equity commitment before the end of 2012 and a further 10% in 2013.
“Like many institutional investor types, North American endowments have been impacted by the tumultuous financial markets in recent years,” Preqin’s Emma Dineen stated in a release. “Despite some of these institutions being faced with liquidity issues and over-allocation to the asset class, many have ramped up their exposure to private equity investment over the past few years and it is clear that this important investor group remains committed in the long term.”
Dineen added that while turbulent financial markets have made investors more cautious, many North American endowments are proving their dedication to private equity by making plans for their next fund commitments.
Furthermore, Preqin’s study revealed that 72% of respondents view North America as presenting the most attractive opportunities for private equity investment, while 31% identify Europe as such.
Additional research by the Private Equity Growth Capital Council (PEGCC) points to the allure of private equity investments. New analysis by the firm showed that private equity has consistently beat the S&P 500 index.
“Private equity continues to outperform the S&P 500 over both near and long time horizons,” said PEGCC President & CEO, Steve Judge. “The consistent private equity outperformance of public markets is essential for pension funds, university endowments and charitable foundations to achieve their investment goals. Private equity helps provide retirement security to millions, makes college a reality for more students and funds charitable causes.”