In The News

Institutional investors remain cautious about private real estate even as the asset class has begun to heal.

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Meanwhile, Shelley Santulli, principal for real assets at NEPC, said appraised values still have not fully reset to transaction prices, making valuation methods and managers’ ability to distribute capital central to due diligence.

Those unresolved exits are restricting new fundraising even where investment opportunities look appealing, she said.

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That said, Santulli said some NEPC clients favor newer debt strategies for income and downside protection, while others prefer opportunistic equity funds that can buy at reset valuations.

U.S. public pension funds posted another strong fiscal year, driven by outperformances in domestic and international public equities.

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Asset allocation was something that many pension funds reaped benefits from in 2026, noted Margaret C. Belmondo, partner and head of public fund practice at NEPC. In a statement to P&I, Belmondo noted, “the plans that stayed fully invested and held meaningful non-U.S. equity exposure were generally rewarded, while more conservative portfolios with larger fixed-income allocations lagged.”

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This is especially true for pension systems riding the high of technology-led outperformances, including SpaceX’s launch onto the public market. Several pension funds holding stakes in the $1.77 trillion tech giant reported massive growth following the company’s IPO in late June. However, these gains did not likely contribute to the general outperformance, as only few plans “had meaningful SpaceX exposure,” Belmondo said.

Frustrated with mega-fund exposure, institutional investors are increasingly moving down market. CalPERS, for example, has raised its commitments to the mid-market significantly over the last few years.

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Nicholas Mann, partner and senior investment director at NEPC, says that lower mid-market and mid-market managers have more tools for value creation. Those managers, compared with those doing larger buyouts, are less reliant on leverage to generate returns, which is a profound advantage in a higher interest rate environment.

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While distributions remain muted across private equity funds, institutional investors are persuaded by how the mid-market’s advertised exit flexibility may pave the way for improved liquidity going forward, according to NEPC’s Mann.

“[Mid-market PE managers] are less reliant on cost of capital and still have a large buyer universe to sell to where they can achieve some multiple expansion,” Mann says. “Most of the DPI we are seeing is coming from the lower mid-market strategies that are building scaled platforms – doing the work of professionalizing and growing companies into scaled platforms that are attractive to larger PE sponsors with lots of dry powder.”

The Pensions & Investments WorldPensionSummit is honoring individuals who are reshaping the future of institutional investment.

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“Nominees for the second class were required to have around 10 years of industry experience and provide evidence of their progress, contributions and positions as role models.”

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Judges will select 15 Rising Stars from the 29 nominees, with honorees recognized at the WorldPensionSummit in The Hague this November.

Hedge funds are back and bigger than ever before. And now a growing category sits atop the industry: multistrategy funds.

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Investor flows often happen at the wrong times coming out and the wrong times coming in, said Sarah Samuels, CIO and partner at consultant NEPC. But for those that had the fortitude to keep going with hedge funds even after some years of underperformance relative to fully invested markets, there have been some strong returns in recent years.

“We have a pretty high bar for hedge funds to make their way into a portfolio,” Samuels said. “We are very supportive of the right ones, and the way that we think about it is: Do you provide something unique in terms of a unique return stream that you can’t get elsewhere in the public markets, like a unique alpha stream? Is it a diversifier, or is it a return enhancer? And we’re looking for a certain bogey of how much of the alpha goes to the manager versus how much does the investor keep?”

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Healthcare conditions are improving, but not enough for hospital systems to stop drawing on their portfolios.

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Institutional healthcare investors like NEPC are “seeing clients increasingly relying on their operating pools.

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David Moore, a partner at NEPC who heads the advisory giant’s healthcare team, said he is “seeing clients increasingly relying on their operating pools for a source of liquidity.”

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While rising costs are pressuring margins, NEPC’s Moore added that the healthcare systems have become increasingly nimble in adjusting to changing market conditions.

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Liquidity, valuations and private credit were key themes at the Greenwich Economic Forum, an annual gathering of alternative investors that took place in Greenwich, CT., from 5-7 October.

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Late last year, NEPC adjusted its pacing model to reflect this longer hold period. The firm extended its fund life assumption for VC vehicles to 17 years. Other assumptions include 15 years for buyout, 16 years for fund-of-funds and eight years for private debt.

Without these adjustments, actual fund lives and net asset values extend beyond the model’s assumptions and reduce LPs’ capacity to commit to future funds, said Sarah Samuels, the investment consultant’s chief investment officer.

“Don’t try to time vintage years, and don’t skip funds. If you do need to pull back, pull back in check size. Don’t skip a high-conviction GP,” she said.

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U.S. college and university endowments are beginning to post their returns for the fiscal year ended June 30, with at least two citing their investments in SpaceX as a major driver of outperformance, but experts warn the high concentration of their portfolios in a single stock creates asset allocation and risk problems.

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Colin Hatton, principal and senior consultant for endowments and foundations at NEPC, said concentration risk becomes more acute as a holding grows. One of the clearest warning signs for investment committees is when a single company reaches roughly 5% of total assets, he said.

Such concentrations are uncommon in modern endowment portfolios, which generally rely on diversification to generate steadier returns and support annual spending, he said. Still, large single-company positions are not unprecedented: Some institutions with sizable venture portfolios are approaching 5% exposure to individual companies, and a smaller number have exceeded that level.

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Rated note feeder structures continue to gain traction across private markets, as institutional investors seek more efficient ways to allocate capital while managing regulatory constraints.

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“Rated note feeder structures can improve capital treatment by allowing a portion of a private market investment to be held on Schedule D rather than Schedule BA,” Colton Lavin, principal and senior investment director in private debt at NEPC tells SCI. “As a result, we have observed some investors, particularly insurance companies, view these structures as a potential tool for expanding private market allocations while managing associated capital charges.”