Business & Tech

Mass. pension fund enjoyed highest return from private equity investments of any in country

The Massachusetts state pension fund is tops in its field when it comes to picking winners in the difficult world of private equity investments.

The American Investment Council, a group that represents the private equity industry, is releasing a report Wednesday that shows the Massachusetts Pension Reserves Investment Trust in the top position nationwide, based on the annualized 10-year return from its private equity investments. The PRIT fund enjoyed a 13.4 percent return through the state fiscal year that ended June 30, 2017.

That compares to a median return of 8.6 percent for the private equity investments at the 160 or so public pension funds rated by the council, and is roughly double what the state earned from its public stock investments over that time.


Massachusetts has scored tops in the council’s rankings several times since the group began tracking results in 2012.

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“It’s a good validation,” said Michael Bailey, director of private equity investments for the nearly $72 billion pension fund.

Bailey said the Massachusetts team is especially skilled in picking private equity managers with solid track records over time, as opposed to just strong short-term returns.

“We built this machine internally that we think is giving us good results,” Bailey said.

The list of private equity firms that manage state pension money includes Boston-based Advent International as well as Thoma Bravo and Hellman & Friedman. The pension fund currently invests about $7.5 billion, or 10.5 percent of its total size, in private equity.


Bronwyn Bailey, vice president of research and investor relations at the investment council, said private equity investments for pension funds generally outperform public stock investments. That’s partly because private equity investors can take a more long-term approach, she said.

“Because they’re private companies, they’re not facing the quarterly review of the public markets like a [public] stock would,” said Bailey, who is not related to Michael Bailey. “They’re better able to time when they invest and when they exit a company.”

Jon Chesto can be reached at Follow him on Twitter @jonchesto.