Private Equity Annual Program Review

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Private Equity Annual Program Review Attachment 1, Page 6 of 34 Private Equity: Program Role • Primary Role − Private Equity allocations are a means of enhancing equity returns through a value-added approach to investment management of a diverse set of portfolio companies and to capture the illiquidity premium. The major driver for returns is appreciation, with negligible cash yield. − ALM Workshop 2013 • Driver of total performance – Price appreciation • Risks – High growth risks – Illiquid – Leverage – Unfunded commitments 6
Private Equity Annual Program Review Attachment 1, Page 7 of 34 Program Investment Philosophy • Long-term investor • Manager selection and alignment of interest are important to PE’s success • Commingled fund model limits ability for alignment • Over-diversification negatively impacts performance • Costs matter 7
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Private Equity Annual Program Review

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