'Pension funds shouldn't be pushed into private equity sector'

The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.

Chancellor of the Exchequer, Rachel Reeves
Reeves may have forgotten that past performance is no guide to the future
(Image credit: Andrew Milligan - WPA Pool/Getty Images)

Yale wants out. Four years ago, half of its assets were invested in various illiquid markets, mostly in private equity. This year, the university is looking to sell roughly $6 billion worth of private-equity (PE) assets, 30% of the total in that sector and 15% of the fund’s overall assets ($41.4 billion), says Bloomberg. It is not alone. Harvard is looking to sell $1 billion worth of PE assets and, according to the Financial Times, Canadian and Danish pension funds have been loath to put any new money in, as have some of China’s big funds. Overall, fundraising was down last year for the third year in a row.

You can see why. PE has had a brilliant couple of decades, outperforming the S&P 500 nicely since the millennium. When debt was cheap and PE relatively niche, buying companies on borrowed money, restructuring them (borrow more, cut costs) and flogging them on for a fortune made a lot of sense (and a lot of money for investors and high fee-charging managers).

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.