During the financial crisis, private equity fundraising suffered because of the so-called denominator effect, where pension funds’ allocations to the industry were sharply reduced because the overall value of their assets had fallen due to plummeting public equities markets. Now, with equities on the rise, the opposite seems to be true.

The denominator effect, which happened because pension schemes typically attempt to keep the percentage of their assets in private equity constant even though the value of their assets changes, has been likened to a pendulum by some industry executives.