Investment experts and economists have been warning pension funds and endowments for almost a decade now that Private Equity is no panacea, with high risk and poor risk adjusted returns. Please read this story in the Wall Street Journal that explains the risk to pension funds around the world.
Private Equity World Engulfed by Perfect Storm
Tariff turmoil dashes investors’ hopes for payouts; dealmaking grinds to near standstill
By Matt Wirz and Miriam Gottfried
April 17, 2025 8:00 pm ET
One of Wall Street’s most consistent profit engines is close to breaking down.
Even before President Trump’s tariff chaos, buyout firms had been struggling to sell their portfolio companies and return money to anxious investors. Now recession fears and market turmoil have brought dealmaking to a near standstill.
Shares of Apollo Global Management, Blackstone BX 0.78%increase; green up pointing triangle, KKR and other private-equity fund managers are down 20% or more this year, far worse than the S&P 500’s sharp losses.
The longer the deal logjam lasts, the harder it will be for firms to hand money back to clients such as pensions and endowments. The amount of unrealized value the funds owe their investors has hit record levels, according to an analysis by credit-ratings firm Moody’s Ratings. That makes it tougher for the firms to raise new funds.