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What is the desired private direct portfolio allocation % for institutions, family offices, RIAs, BDs and retail HNW channels?

Jan-Erik Asplund

Co-Founder at Sacra

Using data from Preqin, McKinsey, and Silicon Valley Bank, here are some representative 2021 allocation targets for private equity in general across different investor classes:

  • Ultra high net worth individuals: 27%
  • Family offices: 16%
  • Endowments and foundations: 14%
  • US pension funds: 8.9%
  • Public pension funds: 8%
  • Private pension funds: 6.5%
  • Insurance companies: 4%

    • The trend of investors doing these investments by going “direct” into private companies—rather than investing in a fund—has been increasing over the past several years. 

    From our research, it appears that the larger institutional investors with the clout to co-invest or invest directly into companies are doing so aggressively.

    Today at OMERS, the CAD$85 billion pension fund serving Ontario’s municipal workers, about 70% of the private equity portfolio consists of direct stakes in business, while 30% consists of fund investments.

    At CalSTRS, about 20% of the private equity portfolio is direct co-investments, but they’re aiming to increase that in the years to come after noting higher returns and lower costs from including more direct investments in their strategy.

    We’re seeing the same trend play out across smaller, family office investors. Across SVB family office portfolios, direct investments represent 53% of private equity assets, while fund investments represent 47%.