190Allocations to private equity by institutional investors is growing, while money for hedge funds remains flat at under 1%, though it is expected to see "significant" inflows in coming years, according to a new report by Greenwich Associates. In its latest survey, Greenwich found that p.e. assets accounted for 8.9% of U.S. endowments, 4% of public pension assets and 2.3% of corporate plan assets, with 48%, 41% and 30% of those funds, respectively, saying they will made significant increases within the next three years. Corporate hedge fund allocations were unchanged at 0.9%, while public allocations inched up 0.1% to 0.7%. Greenwich, says, however, that 34% of U.S. pensions and endowments plans are making major new commitments to HFs over the next three years. According to the report, institutional investors in private equity are looking for annual returns of 11.3% over the next five years – the highest expected rate of return of any other asset class – and a drool factor in attracting even more money to private equity.
In a different survey, 65% of limited partners polled said they expect to increase their commitments to emerging-markets private equity in the next five years. The study by the Emerging Markets Private Equity Association also found that fundraising for p.e. in emerging markets soared 350% last year over 2004 to $21 billion. Of that amount, $15.45 billion was raised in Asia, with $2.7 billion in central and Eastern Europe/Russia, $2 billion in Latin America, and less than $1 billion in Africa and the Middle East.