Key Takeaways
- • Colorado PERA is exploring both buyer and seller opportunities in the private equity secondary market, according to board meeting materials from March 16, positioning itself among the latest U.S. pension funds to tap this asset class.
- • Private equity represents approximately 10% of PERA's total portfolio and has delivered annualized returns of 11% over the past decade, making secondaries a strategic extension of the fund's existing PE allocation.
- • PERA manages $66.7 billion in assets for over 700,000 members and retirees, with private equity accessed through limited partnerships managed by experienced sponsors rather than direct transactions.
- • The secondaries market provides institutional investors like PERA with liquidity options to make early exits, liquidate assets, or rebalance portfolios without disrupting broader investment strategy.
Summary
Colorado's Public Employees' Retirement Association has joined the growing ranks of U.S. pension funds evaluating secondary market opportunities in private equity. According to staff materials presented at PERA's March 16 board meeting, the fund intends to explore both buying and selling positions in PE secondary assets—a strategic shift reflecting broader institutional appetite for flexibility within alternative asset allocations.
PERA's consideration of secondaries comes as private equity has established itself as a meaningful component of the pension fund's diversified portfolio. As of mid-2022, PE represented approximately 10% of total assets, with a long-term target allocation at that same level. More significantly, the asset class has demonstrated strong performance, delivering annualized returns of 11% over the past decade—meaningfully outpacing traditional equity and fixed-income returns and justifying its position despite representing a smaller portion of the overall $66.7 billion fund.
The pension fund currently accesses private equity through limited partnerships and funds managed by specialized general partners and sponsors rather than pursuing direct investments. This model provides exposure to targeted sectors including technology, energy, healthcare, and consumer products. The secondary market extends this strategy by enabling PERA to adjust its PE exposure through the purchase of existing fund positions from other limited partners or the sale of mature positions to achieve portfolio rebalancing and liquidity objectives.
By pursuing secondaries as both a buyer and seller, PERA gains tactical flexibility within its PE allocation—allowing early exits from underperforming funds, acceleration of cash redeployment, and dynamic rebalancing in response to portfolio needs. This approach aligns with PERA's core mission of securing reliable retirement income for Colorado's public employees while maintaining the disciplined, diversified investment framework that has supported consistent long-term performance.
PERA's consideration of secondaries comes as private equity has established itself as a meaningful component of the pension fund's diversified portfolio. As of mid-2022, PE represented approximately 10% of total assets, with a long-term target allocation at that same level. More significantly, the asset class has demonstrated strong performance, delivering annualized returns of 11% over the past decade—meaningfully outpacing traditional equity and fixed-income returns and justifying its position despite representing a smaller portion of the overall $66.7 billion fund.
The pension fund currently accesses private equity through limited partnerships and funds managed by specialized general partners and sponsors rather than pursuing direct investments. This model provides exposure to targeted sectors including technology, energy, healthcare, and consumer products. The secondary market extends this strategy by enabling PERA to adjust its PE exposure through the purchase of existing fund positions from other limited partners or the sale of mature positions to achieve portfolio rebalancing and liquidity objectives.
By pursuing secondaries as both a buyer and seller, PERA gains tactical flexibility within its PE allocation—allowing early exits from underperforming funds, acceleration of cash redeployment, and dynamic rebalancing in response to portfolio needs. This approach aligns with PERA's core mission of securing reliable retirement income for Colorado's public employees while maintaining the disciplined, diversified investment framework that has supported consistent long-term performance.
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