The public pension fund system in the US manages a collective $5.9tn across more than 600 plans for millions of current and retired employees, including state administrators, teachers, police and fire service members, and municipal workers, among others. 

Although pension funds have enjoyed a period of unprecedented investment performance and steadily increasing contributions, the market outlook is less positive. Concerns about higher inflation in the US and mixed expectations of economic growth have tempered future prospects for growth and long-term portfolio performance.

With estimates for global equities and bonds both low, pension funds will be looking to higher-yielding, and in some cases lower-volatility, alternative investments to bolster their returns and hedge against inflation. Virtually all US plans have allocations to alternatives, but the largest ones have significant sway in the industry with their sizable investment.

As pensions' influence over private capital grows, we look at the key changes underway in the relationship between the public pension system and private capital, using data from Preqin Pro. Read the report to learn more about the increase in adoption of ESG policies, capital consolidation with the largest managers, and the continued evolution of pension funds' alternatives portfolios, among other trends.