Many investors are unaware that they can put private equity, private stock
and real estate into a retirement account - subject to government
rules for holding those investments - said PENSCO chief executive, Kelly
Rodriques.

The comments may seem surprising at a time when large institutional investors, such as pension funds and endowments, have been urged to look at the "Yale Model" of investing, in which private equity plays a prominent asset allocation role. Advocates of the model say private equity returns, which are obtained over the long term, are well suited as part of a diversified portfolio.

“In fact, holding high
potential investments in a retirement account is one of the best ways to build
wealth, generate income or both,” Rodriques said.

PENSCO, whose clients hold $5 billion in private equity investments in retirement accounts, has observed that California has the largest concentration of private equity
investments held in retirement accounts due to its size and history of “incubating”
technology firms.

Interestingly, however, less populous states such
as Colorado, Arizona
and Washington
also have a significant amount of private equity held in retirement accounts, it said.

Rounding out the top 10
states for PE investments in retirement accounts after California is: Texas;
Florida; New York;
Colorado; Arizona;
Illinois; Washington;
New Jersey; and Pennsylvania.

The top 10 metropolitan
areas, meanwhile, are: Los Angeles-Long Beach, CA; San
Francisco, CA; Oakland,
CA; Orange County,
CA; San Jose, CA; New York City, NY; Chicago, IL; Houston, TX; Denver,
CO; and Riverside-San Bernardino,
CA.

“Given that federal and
state taxes on individuals are increasing, it makes more sense than ever to
make a private equity transaction from funds in a qualified retirement account to
realize the significant tax advantages,” Rodriques added.

PENSCO said private equity
is the fastest-growing asset class held by its clients in retirement accounts -
followed by real estate, unsecured notes, secured notes and precious metals.

It added that private equity
investments held at the firm have grown 5 per cent over the past 12 months and
10 per cent over the past six months, due to asset inflow and appreciation.

Private equity includes
investments in privately-held companies and private equity funds, as well as
hedge funds, Limited Liability Partnerships and Limited Liability Corporations, PENSCO said.