Bloomberg just revealed a striking new trend:
Over the last decade, America’s largest pension funds have more than doubled their exposure to private equity.
These are some of the most sophisticated investors in the world. Their job is to manage billions or even trillions of dollars for teachers, firefighters, and retirees. They have armies of analysts, the best data, and virtually unlimited resources.
So why are they piling into private equity?
Because that’s where the returns are.
The Shrinking Public Market
First, let’s look at what’s happening in the public markets.
Since 1996, the number of publicly-traded companies in the U.S. has fallen by nearly 50%. Think about that: half the investable universe of stocks has simply disappeared.
Why? Two big reasons:
- Regulation and compliance headaches — going public is expensive and burdensome.
- Acquisitiveness of large companies — deep-pocketed giants are buying up smaller rivals before they ever reach the stock market.
The result? Fewer opportunities for investors like us to buy growth companies once they hit the public exchanges.
The Rise of the Unicorns
Meanwhile, the private markets are booming.
Thanks to abundant private capital, startups are staying private longer. In fact, there are now 1,276 privately held “unicorns” — companies worth $1 billion or more. In the past, companies like this would have gone public years ago.
These aren’t just speculative bets. They’re some of the most innovative, fastest-growing businesses in the world. But unless you’re investing in private markets, you won’t get access to them until much later, after most of the upside has already been captured.
Following the Smart Money
Which brings us back to pensions.
As you can see in the below chart from Bloomberg, between 2015 and 2023, the share of pension fund assets allocated to private equity has more than doubled:
For example, look at the data I highlighted in red from Oregon Public Employee Retirement System. As you can see, its share of assets allocated to private equity went from 19.5% in 2015, to 45.07% in 2023. Other pension funds have similar increases.
This is a dramatic shift. For decades, pensions relied on a traditional 60/40 portfolio — 60% stocks, 40% bonds. But with public market opportunities shrinking and bond yields stagnating, they’ve had to adapt.
And they’re adapting by moving into private equity.
Why? The Returns
At the end of the day, it all comes down to performance.
According to Cambridge Associates — a financial advisor whose clients include the Rockefeller Family and the Bill Gates Foundation — startup investments have produced average annual returns of 58% over the last twenty-five years.
That’s not a typo. 58%.
Of course, not every private deal produces blockbuster returns. But on average, this asset class has trounced the public markets. That’s why the biggest, most sophisticated investors are doubling their exposure to it.
A Door Opens for Individual Investors
Until recently, these opportunities were mostly off-limits to ordinary investors. But change is in the air.
The Trump administration recently announced its intention to make it easier for individuals to put retirement cash into alternative assets like private equity.
In the meantime, you have options to start investing in startups today.
So in upcoming issues, not only will I show you exactly how to find these opportunities, but I’ll show you how to build a portfolio of them, so you can maximize your profits while minimizing your risk.
Bottom Line
America’s pension funds are doubling their exposure to private equity because that’s where the best opportunities are. The public markets are shrinking, private unicorns are thriving, and the returns are undeniable.
If you want to grow your wealth like the smartest institutions in the world, you should be looking closely at the same asset class they are.
Private equity isn’t just the future of investing — it’s the present. And the earlier you get positioned, the better.
Happy Investing,
Best Regards,
Founder
Crowdability.com
