Most big pensions (pensions news), like CalPERS (CalPERS news) and CalSTRS, invest in private equity funds. But the Ontario Teachers' Pension Plan has taken a different tack: They make direct private equity investment on their own. 

Business Week notes the pension has invested in almost 300 companies over the past 20 years. It has fared pretty well in terms of performance. Since 1990, the pension's private equity arm has earned nearly 20 percent a year, which puts it in line with top private equity firms. In 2008, however, the pension lost 13 percent, nearly double the average buyout fund. 

The issue is whether more pensions will adopt this approach. The idea of disintermediating the big-name funds may be attractive, as they charge a hefty mark-up for their services. And some pension boards have been stung by the pay-to-play scandals that engulfed the use of consultants to pick private equity funds.

It sounds compelling, but then the public pension will be competing with the best and brightest of Wall Street. Developing that kind of expertise doesn't happen overnight, and it would be massively expensive. There will be some blow-ups and they would not play well in the politicized environment most pensions exist in. 

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