78% expect the default rate on private equity deals to be comparable to BB or above rated bonds. But only 2% of private equity deals monitored by Moody's have credit ratings of BB or above. 98% of PE deals are rated B or below, but only 23% of allocators expected default rates to be comparable to B or below rated bonds.

If that sounds familiar, it is because it seems so similar to the dashed expectations of subprime mortgage investors.

If history feels like it's repeating itself, it probably is. Endowments and pension funds were counting on higher  – and imaginary – returns of hedge funds to make up for the low returns on offer elsewhere. Financial consultants played no small part in that last round of magical thinking about hedge funds and no doubt have a similar role this time.

The only part that has yet to unfold is the probability that private equity turns out to be the next great asset class to disappoint.

University endowments and other big institutions have yet to learn that chasing the mirage of above-market returns more often than not leads to subpar performance.

This column was provided by Bloomberg News.

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