Private equity has been a favoured asset class for professional managers because it has historically produced superior returns. Annual returns over the past twenty years have averaged 13.7%, beating listed stocks, bonds, real estate, and most other forms of investment. Its risk is a reference to the importance of spreading investments over long time periods, in multiple industry sectors, and in a large number of investments. Professional money managers know how to do so, which is why Private Equity has a prominent place in large investment portfolios, even in conservative, but long-term ones like those of pension funds and university endowments.