Role Models: Pensions Can Use Data to Optimize PI Allocations

Published on April 8, 2024

Tapping private markets in search of added returns is common practice among defined benefit pensions and other institutional investors. However, many pensions still avoid private investments (PI) out of fear that long-term capital lockups could elevate liquidity risk. Some also remain alarmed by the potential consequences of the “denominator effect.” This refers to situations in which total portfolio value decreases as a result of public market corrections, while private asset valuations lag, causing the PI sleeve of the portfolio to be above its target allocation.

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