After pouring $1.2 trillion into private-equity firms during the past 10 years, pension funds are growing alarmed at the small amount of cash they are getting back to meet obligations to pensioners. The recession has slashed the value of assets acquired by private-equity funds and closed the door to cashing out through public-equity markets. Pension-fund managers increasingly are unimpressed with calculations of internal rate of return that private-equity managers offer to show successful they have been. "I work for over 400,000 employees, and they can't eat IRRs," said Gary Bruebaker, chief investment officer of the Washington State Investment Board.

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