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Generally, limited partners like pension funds diversify their asset allocation. I found this interesting presentation that shows 57% of US pension funds is in

Generally, limited partners like pension funds diversify their asset allocation. I found this interesting presentation that shows 57% of US pension funds is in the "equities" asset class, but I would expect most of that to be public blue-chip stocks, with a small fraction dedicated to higher-risk growth capital. http://conferences.pionline.com/assets/2014_GPAS_Study_Final.pdf http://conferences.pionline.com/assets/2014_GPAS_Study_Final... In another interesting note, this shows that pension funds in the US grew at over 6% annually between 2003-2013. The recent horror stories you're thinking of are less about pension funds, and more about grandma's savings being tied up in her own house.

bradleyjg 12y ago
Pension funds, especially public pension funds, have been given unrealistic growth targets by employers that want to cheap out on contributions. The only way to even have a chance to hit those growth targets is by taking on risk. So pension manager can't just stick to AAA rated bonds and blue chip stocks. For example, CALPERS targets an overall 7.5% annualized rate of return in its investment portfolio.
- fredfoobar42 12y ago
  Also worth noting CalPERS has been slashing its VC allocations.
  - timr 12y ago
    Fortunately (</sarcasm>) for CalPERS, this late-stage capital isn't considered VC! Many of these late-stage, insane-valuation rounds are euphemistically called "growth capital", and it's being driven by big banks and hedge funds, not VC firms. The Money always finds a way.
- dragonwriter 12y ago
  I'm not sure there is a good case to be made that the CalPERS target is an unrealistic long-term annualized rate of return target. IIRC, they have been making that much over most long and short term windows (they had a horrible -- -27% or something like it -- year in 2008 and so their performance over a 10-year window is still under 7.5%, in the neighborhood of 6.5% I think, but over both shorter and longer windows they are at or significantly above the 7.5% target.)

bradleyjg 12y ago

Pension funds, especially public pension funds, have been given unrealistic growth targets by employers that want to cheap out on contributions. The only way to even have a chance to hit those growth targets is by taking on risk. So pension manager can't just stick to AAA rated bonds and blue chip stocks. For example, CALPERS targets an overall 7.5% annualized rate of return in its investment portfolio.

fredfoobar42 12y ago
Also worth noting CalPERS has been slashing its VC allocations.
- timr 12y ago
  Fortunately (</sarcasm>) for CalPERS, this late-stage capital isn't considered VC! Many of these late-stage, insane-valuation rounds are euphemistically called "growth capital", and it's being driven by big banks and hedge funds, not VC firms. The Money always finds a way.
dragonwriter 12y ago
I'm not sure there is a good case to be made that the CalPERS target is an unrealistic long-term annualized rate of return target. IIRC, they have been making that much over most long and short term windows (they had a horrible -- -27% or something like it -- year in 2008 and so their performance over a 10-year window is still under 7.5%, in the neighborhood of 6.5% I think, but over both shorter and longer windows they are at or significantly above the 7.5% target.)