The brief’s key findings are:
- Since 2000, public pensions have moved more toward alternative assets like private equity and real estate, with significant variation among plans.
- To explain these patterns, the analysis explores changes in plans’ beliefs about the future returns of alternatives and their appetite for risk.
- The findings suggest a growing belief that alternatives will outperform public equities – due to consultant views, peer behavior, and plan experience in the ’90s.
- In contrast, factors related to plans’ appetite for risk play a more limited role.