For more than a year, CalPERS has undergone thoughtful research and analysis of new approaches to the private equity portfolio. Private equity has been CalPERS' highest returning asset class over the past 20 years, including a 16.1 percent return in fiscal year 2017-18. We believe we can increase returns even more by implementing innovative approaches to this important asset class. A direct model allows CalPERS to better source and take advantage of investment opportunities in private equity. As the Fund grows, this model helps CalPERS maintain the target of investing about 10% of the total portfolio in private equity.