Negative Interest Rates Irritate Public Investor Capital


Sovereign wealth funds and other large public institutional investors, such as pensions and superannuation funds, are worried about central bank policy flowing into untested waters – negative interest rates. Large-scale asset purchases combined with low or negative interest rates continue to push institutional investors toward risk assets. The concern is legitimate. U.S. public pensions such as the Los Angeles City Employees’ Retirement System are forced to allocate to more buyout funds to generate higher returns. In February, the Los Angeles City Employees’ Retirement System allocated US$ 40 million to Advent Global Private Equity VIII, a private equity buyout fund managed by Advent International.

High Rental Cost of Money

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