The Oregon State Treasury has been one of the longest-standing investors in private equity, a pioneering move that served it well. But as allocations in 2025 pushed beyond the outer policy limit – 28 per cent of the fund – and a maturing of the asset class puts pressure on returns, a recalibration was necessary. Amanda White spoke to Oregon State Treasurer, Elizabeth Steiner, about the future role and expectations of private equity.
During 2025, the private equity portfolio of the Oregon State Treasury reached $26 billion, or 28 per cent of total assets, pushing the outer boundaries of its policy limits.
This, together with the appointment of a new head of private equity, Tad Fergusson, and a looming asset allocation study, has prompted the investor to review its portfolio for purpose and efficiency. Among recent activities it’s been selling, effectively, on the secondaries market to reduce its allocation and conducting a complete review of managers and opportunities.
“Tad is doing a really deep dive into our strategies for building out our portfolio of managers, assessing the range of managers we have in our portfolio, looking for opportunities that other entities who don’t have the same capacity as us to do that due diligence,” Treasurer Elizabeth Steiner told Top1000funds.com in an interview.
“We are comfortable digging in. We have a range of good relationships with managers. He is looking at how best to deploy our assets in private markets and that is a very important conversation to continue over the next year or so.”
Oregon was one of the earliest investors in private equity, having allocated since the 1980s, including being one of the original investors in KKR. In recent years return pressures and the changing nature of the asset class have prompted investors to review whether PE investments are meeting their expectations, and Oregon is no different.
“It was easy in the days when PE was a new asset type to get in and see outsized returns, and it is obviously harder now and takes more investment of time and a lot more due diligence to make sure you are making the best possible choices,” Steiner says.
In the early days of Oregon’s private equity investments it wasn’t unheard of to see return on investments of 300 to 400 per cent, but in recent times Oregon’s private equity portfolio has struggled. In the year to June 30, 2025, it returned 6.87 per cent, well below the benchmark (10.42 per cent) and as CIO Rex Kim describes it in the annual report “a disappointing year relative to public equity”. Over three and five years it has also fallen short with 3.75 per cent (versus the Russell 3000 index +300 bps of 11.25 per cent) and 14.86 per cent (versus 21.55 per cent)
Steiner attributes the diminishing returns in part to the weight of money and a maturing asset class.
“The early days of PE when it was a much newer strategy, risks were much higher because no one knew what they were doing, so the potential returns were really significant because you had to take significant risks,” she says. “Now the asset class is very well understood and so you’re not going to get the outsized returns from the early days and no one expects that. There are enough institutional investors putting money into PE you can’t get as great terms because of the glut of money in the market.”
For Oregon, part of the focus in its manager review includes the balance between risk and innovation.
“Tad Ferguson is taking a hard look at our strategy for identifying PE managers and trying to figure out how we identify ones that on the one hand offer an opportunity for some innovative thinking but don’t require taking ridiculous amounts of risk,” Steiner says.
“That requires a lot of work to identify all that, and we are evaluating how best to do that because it is really important, and one of the ways we are addressing the returns question.”
In addition, about 22 per cent, or around $290 million, of the fund’s total investment service and manager fees in the 2025 financial year were spent on private equity.
The future of the PE allocation
The review of private equity also ties into the timing of the four-yearly asset allocation review, a process which has just begun. The fund’s risk assessment will be finalised in the first half of 2026, the asset allocation strategy decided in the second half of the year, with implementation beginning in 2027.
Steiner says it’s an opportunity to review private market allocations and ranges in the policy benchmark, which are currently quite large (15 to 27.5 per cent, with a 20 per cent target for private equity.)
“For example, do we say we shave back on more traditional PE and create a specific allocation to private credit as part of our overall private markets’ allocation?” she says. “I want to be really clear: I’m not saying we are doing that, but is that something we could explore? I don’t know the answer to that, but we will be having more robust conversations around that at the Oregon Investment Council.”
Current vice chair, Alline Akintore, will take over as chair of the council in March when Elmer Huh and Tim Miller will also join the six-person board.
“We will be bringing a lot of new perspectives and new conversations and voices to the table which I think will be really important,” Steiner says. “I think it is really exciting to be here right now and heading into this cycle of reassessment, and at a time when there are some really interesting questions.”
It is feasible that as part of the discussion the range and target for private equity is reduced beyond the current allocations “because we decide it’s less interesting at this point”, she says.
“I’m not going to say PE is the ‘buggy whips’ of our generation – people kept investing in buggy whips when it was clear the automobile was coming – but maybe it’s not as interesting as it once was and we need to rethink that.
“To be clear, we are still investing but we are just slowing our pacing.”
Pacing has been reduced by about a third and the exposure has now fallen to about 24 per cent of the fund.
“That has been a smart strategy, we have done really well on the secondary market,” she says.
Steiner is clear there is still strong conviction for investing in private equity at the Oregon Investment Council.
“We still believe that PE is a good investment and we still believe it belongs in our portfolio,” she says. “With a portfolio of $100+ billion you cannot put all your eggs in even two or three baskets, you have to be diversified.
“The CIOs and their teams who do well are those that are nimble and willing to look at new opportunities and constantly re-evaluate what they are doing.”
“And I am pretty darn confident we have a really, really good CIO and a good team under him, in all areas. Our team is working hard to think about this.
“I am willing to take a certain amount of risk on a regular basis but… I’m never going to be cavalier.”
