When will institutions give up on private equity?

The news sounds good on the surface. Buyout funds have raised $139 billion so far in 2007, which puts them on track to beat the $212 billion raised in 2006, according to Private Equity Intelligence. That Blackstone was able to close on a $22 billion fund was some welcome good news in a tough environment. True, some of this fund raising was done in a much more favorable environment. But it does seem like pensions are still hungry for alternative investments. Most have diversification needs and frankly could allocate even more to hedge funds and private equity funds. Recall that CalPERS has only 6 percent in the asset class. That just might go higher. But it does raise the issue, what would it take for them to slow their pace of investment. If returns really tank, that might do it--if a better alternative came along. Not sure what that would be. We might see some grapple with hedge vs. private equity decisions.    

For more on fundraising:
- here's an article from CNNMoney.com