Why Public Pension Funds Are Still Allocating to Private Markets in 2025

August 21, 2025

Public Pension Funds Are Still Allocating to Private Markets in 2025

3:06

If you’ve been following industry chatter lately, you’ve probably heard the refrain:

“Pension funds aren’t allocating to private markets right now.”

It’s catchy. It’s repeated often. And it’s flat-out wrong.

At Dakota, our latest tracking for 2025 public pension fund activity paints a very different picture… one of ongoing, meaningful allocations across asset classes, from private credit to real assets.That’s why, in this article, we’re debunking the myth that public pension funds have stopped allocating to private markets right now. By the end of this, you’ll see the asset classes commitments are going towards and what these means for managers seeking capital.

The Proof Is in the Commitments

This year alone, major public pension funds have committed hundreds of millions to new investments:

Washington State Investment Board: $220 million
Virginia Retirement System: $200 million
Texas Municipal Retirement System: $150 million
Tennessee Consolidated Retirement System: $120 million
Texas County & District Retirement System: $100 million

And these aren’t isolated transactions. They represent a steady flow of capital into multiple sectors, disproving the idea of a “paused” pension allocation environment.

Where the Money Is Going

Breaking down these allocations by asset class reveals a clear focus:

Private Credit: $705 million — The largest slice of the pie, driven by direct lending, asset-based credit, and other yield-generating strategies.
Private Equity: $132 million — Large buyouts remain in focus, with strong support from public capital.
Private Real Estate: $110 million — Stable, income-producing strategies are attracting attention.
Real Assets: $76 million — Infrastructure and tangible asset plays remain relevant.
U.S. Equities: $12 million — Small but targeted public market exposure.

Why the “No Allocations” Narrative Persists

The misconception likely comes from two factors:

Selective Headlines: High-profile pauses get amplified, skewing perception.
Strategic Shifts: Allocations are becoming more targeted and sector-specific.

When strategies change, it can look like a pullback. But the numbers prove otherwise.

The Real Story

The conversation shouldn’t be whether pension funds are investing, they clearly are. But, where they’re putting their money and how their strategies are evolving.

For 2025, the emphasis is clear: yield-focused private credit strategies are leading the way, supported by healthy allocations to private equity, real estate, and real assets. For managers seeking pension capital, the opportunity is alive and well. But alignment and timing are key.

Ready to Find These Investors?

Dakota Marketplace gives you direct access to the people, firms, and data that drive institutional capital flows.Search, filter, and connect with the allocators behind the numbers – all in one platform.

Start your search today with Dakota Marketplace, book a demo!

Written By: Patrick Tighe, Head of Product

The Database For Cold Outreach to Reach Institutional and RIA Investors

Book A Demo

Why Public Pension Funds Are Still Allocating to Private Markets in 2025

Public Pension Funds Are Still Allocating to Private Markets in 2025

The Proof Is in the Commitments

Where the Money Is Going

Why the “No Allocations” Narrative Persists

The Real Story

Ready to Find These Investors?

Subscribe

Related Content

The Database For Cold Outreach to Reach Institutional and RIA Investors

Address

Products & Services

Resources

Events

Company