Investments in Private Equity Still Worth Considering for Institutional

WASHINGTON, November 28, 2007 – Despite the credit squeeze and recent
volatility in financial markets, private equity still can be a worthwhile
investment for pension funds and other investors, according to experts at
Watson Wyatt Worldwide, a leading global consulting firm. However, it is
more important than ever for institutional investors to focus on the long
term, to pick the right fund managers and to ensure that their governance
matches their investment goals.

“Alternative assets still hold a lot of promise for a well-constructed and
well-governed portfolio, but in this type of market, it becomes
increasingly important to differentiate the top-performing managers from
their counterparts,” said Carl Hess, head of Watson Wyatt’s investment
consulting practice in North America. “Discerning the top performers
requires a good governance structure. While this is always important,
investors now are really seeing the benefits of closely monitoring all
aspects of their investment strategies.”

Although the credit squeeze will negatively affect some private equity
funds that have relied heavily on debt to finance their operations, top
managers may be able to make significant gains by spotting and purchasing
promising but distressed businesses more quickly than other managers do. In
the short term, top managers may also be able to generate considerable
returns by purchasing the debt of good-quality, large businesses at
attractive prices as banks look to limit their balance sheet exposures.

Private equity and other investments, including hedge funds, venture
capital and real estate, tend to pay off for investors who have put
significant efforts into governing them. High levels of governance
generally involve larger budgets and a greater devotion of time and
expertise to monitoring investments. In addition, organizations that
achieve high levels of governance tend to build teams with complementary
skills and clear lines of accountability, making for more effective
oversight. Organizations that are not ready for such a commitment often do
better with more traditional forms of investment.

“The current market reiterates the need for a well-diversified program,”
said Sanjay Mansukhani, a senior Watson Wyatt consultant. “The best course
remains making investments that take advantage of market inefficiencies. In
private equity, this means employing skilled managers whose investment
strategies have been shown to succeed.”

Watson Wyatt has published a white paper about the current private equity
outlook. The paper can be found here. More information on building the
appropriate governance structure for investments can be found here.

About Watson Wyatt Investment Consulting

Watson Wyatt Investment Consulting, a division of Watson Wyatt, is focused
on creating financial value for institutional investors through
independent, best-in-class investment advice. The firm provides coordinated
investment strategy advice based on expertise in risk assessment, strategic
asset allocation and investment manager selection to some of the world’s
largest pension funds and institutional investors. It has more than 300
associates in Europe, the Americas and Asia. In the United States,
investment advisory and investment consulting services are provided by
Watson Wyatt Investment Consulting, Inc., which is a subsidiary of Watson
Wyatt Worldwide, Inc. Watson Wyatt Investment Consulting is a registered
investment adviser with the Securities and Exchange Commission.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 7,000 associates in 31
countries and is located on the Web at www.watsonwyatt.com.

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