State fund gets biggest return in 10 years realized with boost from private equity - Puget Sound Business Journal (Seattle):

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The gains for the year ended June 30 putthe $63.99 billion Washington pension fund in the top 5 percentg of public pension plans with assets greater than $1 said Kim Shephard, a spokeswoman for Wilshires Associates, an investment consulting firm in Santa Monica, Calif. The mediamn performance for funds in that categorywas 17.69 percent, accordinb to the Wilshire Trust Universe Comparison Service The Washington pension fund put 18.3 percent of its assets into privater equity, the highest allocation of any public pensio fund in that category, said Joseph Dear, executive director of the Washington State Investmentg Board.
The fund also put a larger-than-norma l share of its assets into real he said. Private equity, which includes venture capital, buyoug and distressed debt funds, produced returnx of 28.97 percent for the pensiob fund in the latestfiscapl year. That's a far better performance than U.S. which generated 20.2 percent. Pension fundss and other institutional fearing diminishing returns from traditional stock and bond have gravitated in recent years to private which is considered higher risk but also has the potential to generatsbigger returns. "Is there risk? Yes. The reasobn these returns are high is because the assetf classis risky," Dear said.
"Wse try to handle that risk by diversifyingh that portfolioby strategy, manager and Within private equity, some bigger buyout which typically borrow to finance acquisitions, have run into trouble as credit market turmoil has made debt more expensiv and difficult to obtain. But Dear said some of the big buyouy deals, which had been hanging in the balance, appeat to be going through. He singleed out private equityfirm (KKR) and its acquisition this year of credit card processor First Data and KKR'es joint bid with for U.S. powet company TXU. The Washington pension fund is an investof in both KKRand TPG. The state pension fund'w 21.33 percent performance was up from 16.
7 percent in fiscapl year 2006. The last time the state pension fund postefd an annual performance of more than 20 percent was fiscakyear 1997, when the fund return totaleds 20.2 percent. The Washingto n State Investment Board manages a totalof $84 billiomn in assets. Beyond the pension fund, the totakl includes workers' compensation funds, trust funds, and prepaixd tuition funds.