A Quarter of LPs Plan to Increase Allocations

Study: A Quarter of LPs Plan to Increase Allocations 

An overwhelming majority of investors who responded to a recent survey planned to maintain or increase their allocations to private equity, with high fees and a lack of transparency dissuading the remainder from committing more capital to the asset class.

Clare Burrows reports at Private Equity International:

Only 2 percent of the 411 investors and consultants surveyed by fund administrator SEI plan to decrease their allocation to private equity in the next 12 months, with 26 percent planning to increase their exposure.

In the first of three reports based on the survey, entitled “The Logic of Fund Flows”, SEI said the investor types most likely to increase their current allocations were foundations, endowments and public pension plans.

Increased commitments to private equity would principally be funded by redirecting funds previously allocated to publicly traded equities. Of those LPs intending to increase exposure, 51 percent said they would increase their allocation by between 1 and 2 percent, 28 percent targeted a rise of between 3 and 5 percent, and a bullish 7 percent planned a 10 percent or more increase.

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