According to the survey conducted by John Evans, associate professor at the University of New South Wales, Australian superannuation funds have increased their commitment to private equity investment from 4.5 percent (2005) to 6 percent (2008). The survey sponsored by private equity fund manager, Adveq Management covered more than 40 Australian Superannuation funds, with $250 billion in funds under management.

Amongst the market turmoil, Super funds remained quite optimistic on private equity investments. As in the 2005 survey, diversification was seen as the main objective behind private equity investment. While, there was a major increase in the use of fund-of-fund structures (50% to 75%), there was a significant fall in the allocation to Australian private equity (74% to 46%).

This came as the nominal return expectations fell 4.9 percent to 11.6 percent. The expectation gave a 3.4 percent premium to listed equity, a valuation stated to be more reasonable and steady, after years which saw some returns above 30 percent.

Australia's sovereign wealth fund, the $60 billion Future Fund, has indicated its intention to get involved in the sector, both domestically and internationally. The general manager of the fund, Paul Costello, stated that they were looking at how the liquid fund could participate at a time when the market is running dry of cash.

As at the end of January, the Future Fund held nearly 75 percent of its $50 billion in cash. The fund's equity allocation has about one-third in the domestic market and two-thirds overseas. Additionally the fund has a 16.5 percent holding in Telstra, received from the Government sale in November 2006 which is worth around $9 billion. Sales in the Telstra holdings are restricted until the end of 2008.

Costello stated the fund's private markets team will focus on opportunities globally across infrastructure, private equity and real estate investments.

Sources:

• The Australian - Future Fund looking at private equity
• The Australian --Future Fund checks out private equity
• Financial Standard – Super funds commit 6pc to private equity
• Reuters – Australia’s Future Fund sees opportunities in debt
• Money Management Private equity remains important
• InvestorDaily – Funds maintain stake in private equity