Private Investments

Our private equity program continues to grow, and ATRF made three additional commitments within established manager relationships during the year. Although the global financial crisis slowed the pace of new investment considerably, overall investment in private equity increased by the end of the year. While we maintain only a limited number of direct manager relationships, the portfolio is well diversified by geography and investment type with investments in over 200 underlying partnerships.

ATRF’s private equity program continues to grow, and the pace of investment will accelerate in the future as a result of the increased allocation to 10% of assets.  Unlike public equities, private investments are typically illiquid and are not valued based on prices quoted on stock exchanges. Valuations tend to be established infrequently, based on best-estimates of fair market value, and price adjustments typically lag valuations in the public markets. While ATRF’s private equity program is in its early stages of growth, rates of return are not meaningful as the returns on earlier investments tend to be offset to a large degree by management fees on newer investments. During this growth phase of the program, the benchmark return for ATRF’s private equity investments has been set to equal the actual rate of return earned on the portfolio. For the 2008-09 fiscal year, this rate of return was -23.5%, as private equity valuations were adjusted downward in response to the weak financial markets in the first half of the fiscal year.