Superannuation funds will remain invested in private equity as they increasingly eye opportunities in distressed debt.
Despite the shake-up in the global credit markets, superannuation funds will maintain their investments in private equity, according to a study from the University of New South Wales.
Forty of Australia's largest superannuation funds took part in the survey, with 94 per cent of participants already invested in private equity.
Fund's allocation to private equity grew from 4.5 per in 2005 to 6 per cent in 2008.
Superannuation funds also saw growing opportunities in distressed assets.
"The volatility in the credit markets will create a different environment for debt. Funds have indicated a greater interest in distressed investments, smaller buy-out transactions and venture-capital investments," University of New South Wales associate professor John Evans said.
Asia has emerged as an attractive region for private equity investments.
Superannuation funds plan to increase their exposure in the region from 3 per cent to 12 per cent.
Fund-of-fund private equity structures were the most favoured approach for superannuation funds.
According to the survey, the funds have an average allocation of 71 per cent of their private equity portfolio to fund-of-fund structures.
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