> which may be worse than hedge funds
PE obtains higher returns than public funds simply because they have more options to invest in. They can put the cash into anything public invested funds can choose, AND a massive range of other projects.
CalPERS is not an ignorant investor. They see the results, and they allocate accordingly.
From your own link : "Over the past ten years, private equity has delivered an annualized return of 11.8%, compared to 8.9% for public equities, 2.4% for fixed income, and 7.7% for real assets. With traditional asset classes like bonds struggling to keep pace with inflation, CalPERS is looking to private equity to help them meet their long-term investment goals."
So yes, if you want worse returns, continue to believe unsupportable things. If you want to manage people's money, then choose well, and this is chosen well.
>Ordinary people have little control over what their pension funds invest in, and typically are not informed on these issues.
Which is good, because they also are not generally capable to manage their investments with as good as returns (otherwise every little mom and pop would beat PE, which is extremely far from the truth).
A google scholar search on PE returns versus public, top several hits that give numbers to the question:
https://www.joim.com/wp-content/uploads/emember/downloads/P0... - PE outperforms
https://openurl.ebsco.com/EPDB%3Agcd%3A7%3A13677223/detailv2...
"The model illuminates why, over the short term, private returns are superior to public ones, whereas over the long term, public and private returns are largely interchangeable after proper adjustments are made, resolving a long-standing conundrum"
https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12154
"We study the performance of nearly 1,400 U.S. buyout and venture capital funds using a new data set from Burgiss. We find better buyout fund performance than previously documented—performance has consistently exceeded that of public markets. Outperformance versus the S&P 500 averages 20% to 27% over a fund's life and more than 3% annually. "
It's best not to invest with emotion, but with knowledge. Knowledge comes from analyzing markets and reading financial industry research, not repeating misinformed tropes.