Growth Equity Gains Traction Among Major U.S. Public Pensions
09.02.25
Features

While the broader U.S. public pension universe continues to expand private equity allocations, a closer look reveals that growth equity – often overshadowed by traditional buyouts – is gaining momentum among some of the largest public pension funds. Notable examples include the California Public Employees’ Retirement System (CalPERS), North Carolina Retirement Systems (NCRS), Washington State Investment Board (WSIB), and the New York State Common Retirement Fund (NYSCRF), with a combined approximate AUM of $1.1 trillion.

CalPERS raised its private equity target to 17% in 2024, up from 13%, citing a goal of “avoiding repeating its past mistakes of procyclicality,” according to prior meeting materials. The move is part of a broader strategy shift that began with the fund’s 2022 overhaul, which also emphasized greater use of co-investments alongside private equity managers. Within its private equity component, the system reported an increase in its “Growth/Expansion” strategy from 21.7% to 24.7% over the past year. This aligns with a June 2025 board meeting statement: “From a strategy perspective, Staff has continued to add exposure to Growth/Expansion and Venture to complement the existing exposure in Large and Mega Buyouts.”

NCRS offers another lens, albeit with nuance. The system’s Investment Policy Statement (IPS) sets a total fund private equity target, alongside a “Growth/Venture” target within private equity. The long-term strategic allocation to private equity is 7% (2024 IPS). From 2022 to 2023, the target weight of different elements within private equity shifted: “Growth/Venture” increased from 20% to 25%, “Buyout” decreased from 50% to 45%, and “Special Situations” remained at 30%. This reweighting reflects the system’s desire to capture higher potential returns and innovation-driven upside in growth strategies, complementing the more mature and often lower-growth profile of traditional buyouts while maintaining diversification across private equity styles.

For WSIB, focus should be on the Commingled Trust Fund (CTF), which accounts for nearly 88% of the total AUM of $186.7 billion. In contrast to NCRS’s conservative allocation, the CTF takes a more aggressive stance, with a target allocation of 25% to private equity. Rising actual allocations are apparent, increasing from 23.4% in Q1 2020 to 28.7% in Q1 2022, before stabilizing just above 29% in Q1 2025. The “Growth Equity/Venture Capital” portion of private equity has remained stable at 18%-19.5%, but its value nearly doubled over five years, from $4.7 billion to $9 billion.

Lastly, NYSCRF maintains a 15% target allocation to private equity. Within its private equity portfolio, the system includes various fund types, including “Growth Equity.” From 2023 to 2024, the allocation to this strategy continued its upward trend, rising from 11% to almost 12% of the private equity portfolio. Moreover, in March and May of this year, the fund announced deals with private equity firms KKR and Thoma Bravo totaling $500 million and $300 million, respectively, highlighting its ongoing commitment to investment firms which pursue expansion-stage companies.

For growth equity managers, these trends carry practical implications. CalPERS and NYSCRF stand out as immediate and transparent sources of institutional capital, offering both mandates and co-investment opportunities. While NCRS and WSIB illustrate how policy-driven allocation changes can create meaningful deal flow, signaling a growing appetite for growth equity strategies within private equity.

In conclusion, the increasing allocation to growth equity among these major U.S. public pensions underscores a broader recognition that expansion-stage investments are not only complementary to traditional buyouts but are becoming a central part of strategic portfolio growth.

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