Asset Owners Weigh In On Callan's Institutional Private Equity Survey

69 Respondents Offer Insights on Program Administration;
Staffing a Widespread Source of Frustration

Media contact: Elizabeth Anathan, 415-274-3020; MediaRelations@Callan.com

SAN FRANCISCO (September 26, 2017)—Callan LLC recently published the results of its first-ever Private Equity Survey, which included responses from 69 institutional investors with $1.2 trillion of plan assets. Respondents’ private equity programs totaled $103.3 billion and included 2,715 partnership investments made with 540 unique general partners.

“We wanted to understand what factors lead to the evolution of each of the different implementation models,” said survey author Jay Nayak, a senior vice president in Callan’s Private Equity Research group. “Expectedly, the size of the investment program was a determining factor, but this survey also revealed that an array of other organizational, staffing, and governance factors may sway the selection of an implementation model away from an optimal approach for some institutional investors.”

The survey, which is available on Callan’s website, focused on deployment models, patterns of investment and commitment activities over time, governance and oversight, staffing and resources, and responsibilities for program administration functions. Callan publishes a variety of research and data on all types of alternative investments, including the quarterly Private Markets Trends newsletter.

Other key findings include:

Staffing a widespread source of frustration: Asset owners face limited dedicated resources and challenges in hiring and retaining experienced staff. Respondents noted that a majority of investment professionals’ time was spent performing back office and administrative tasks. Through a parallel compensation study, we learned that staffing and turnover issues were magnified by a lack of a clear career and compensation progression for private equity staff.

Similar investments: Survey respondents’ private equity programs were invested similarly, with a heavy emphasis on buyout investments in a narrow—and increasingly concentrated—universe of general partner sponsors. In 2016, 82% of the private equity commitments reported were “re-ups” with existing general partners, the highest rate across all years analyzed.

Implementation varies: The implementation approach is driven in part by governance and oversight body involvement. Private equity programs administered by internal staff reported wider latitude to make operational, strategic, and implementation decisions, while plans selecting discretionary consultant/fund-of-funds implementation reported a high degree of oversight body involvement across all functions.

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About Callan

Callan was founded as an employee-owned investment consulting firm in 1973. Since that time, we have empowered institutional clients with creative, customized investment solutions that are backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $2 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has five offices throughout the U.S. For more information, please visit www.callan.com.