Sample Institutional Allocations to Private Equity

Sophisticated institutional investors have used traditional private equity for years in the form of limited partnerships and fund of funds to provide diversification and generate alpha in their allocations.

Alpha: A measure of performance on a risk-adjusted basis.

Public Pension Plans

Source: Private Equity Intelligence; 2007 LP Universe Survey

*The California Public Employees Retirement System

**The California State Teachers Retirement System

Endowments

Source: The Harvard, Yale 2007 Annual Reports and Stanford 2006 Annual Report

Until now, traditional Private Equity had numerous barriers to entry for individuals, financial advisors, and retirement plan participants:

• Limited access to best managers - Difficult to get into offerings from top quartile managers
• Lack of liquidity - Partnership structures often require 5-7 year lockups
• High minimums - Can prevent adequate diversification
• Need for daily valuation - Most widely used investment platforms require daily pricing

Role of Private Equity in Individual Allocations:

	2.6% = Market Neutral Allocation According to Ibbotson Associates, "The portion of the private equity asset class that is available for purchase represents approximately 2.6% of the world-wide investable universe. A range around this 2.6% market neutral allocation varying from 0% to 10% seems to be an appropriate allocation range."
Source: Private Equity and Strategic Asset Allocation 2007