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Good Idea or Bad Idea: Private equity for pension plans?

alphaarchitect

3 weeks ago

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Private equity performance is commonly evaluated using measures such as internal rates of return, cash multiples, and public market equivalents. But these measures do not necessarily answer the question that matters most to an institutional investor:Did private equity improve this investor’s portfolio after accounting for the risks it already carried?

A high private equity return may reflect genuine manager skill, compensation for bearing greater risk, or simply access to investments unavaila...

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