Last year was clearly a time for reflection, as record losses prompted many investors to rethink their strategies. GPs paused to concentrate on portfolios and LPs reassessed their manager selections – with some taking it a step further and reviewing their entire asset allocation strategies.

Last summer CalPERS emailed your editor: "This is an extraordinary time... Certainly there are no plans to quit private equity, but the role it will play in our overall market strategy is undetermined." Statements such as these had the industry waiting with bated breath for boards to announce new investment plans, for such huge LPs aren't just cheque writers, they're also deemed immensely influential trendsetters for the rest of the institutional investment world.

With losses on private equity exposure in the double digits for many endowment funds, fears were rife that it was a changing of the guard for private equity investment. But in fact despite all the rhetoric, many of the world's largest investors have maintained their allocations to the asset class. CalPERS announced in December that it was holding steady at 14%, while Yale increased its allocation (see cover story, page X).

And too right: CalPERS's 2010 net return of 12.5% was driven primarily by private equity. The asset generated a 21.5% return, up from -6% the year before. The figure outshines the S&P 500's 15%, proving that if given a little patience, superior risk-adjusted returns are still the name of the game.