Assets under management at the world’s largest pension funds not only grew faster through 2017 than the previous year, but also became more concentrated among the top 20 such funds, according to the latest Global 300 research from Willis Towers Watson’s Thinking Ahead Institute.
Total AUM of the 300 biggest pension funds jumped 15.1% to reach $18.1trn, a marked increased in the 6.1% rater of growth in AUM value through 2016.
The top 20 funds studied now account for 41.1% of the AUM total, up from 40.3% the previous year.
Among the other key trends noted include the continued advance of emerging markets based funds, with Employees’ Provident Fund (India) making the top 20, marking the fourth EM fund to make the top 20 in the past decade.
The research also highlights increased focus on governance as these vehicles for long term savings and investments are being buffeted by multiple factors such as demographic change, social expectations, politics, sustainability, regulation and technology.
Also noteable: the assets of defined contribution funds increased faster, by 17.6%, than those of defined benefit funds, 13.5%. And DB assets as a share of the total fell, to 64.7% from 65.5% in 2016.
That noted, the research also suggests that there is resilience in DB, and that hybrid, rather than DC solutions may gain market share.
Sovereign and public sector pension funds account for 68.6% of the total assets, increasing by 0.2% from 2016.
By asset class, the top 20 funds have a weighting to equities, 46.3%, with fixed income behind at 36.1%, and alternatives and cash at 17.6%. However, there are regional differences, with the Asia Pacific funds largely allocated to fixed income, 52.5%, while North American funds were weighted to alternatives, 34.8%.
Click here to view the full report: PI-300_2017
|Top 20 pension funds (US $ millions)|
|1||Government Pension Investment||Japan||$1,443,554|
|2||Government Pension Fund||Norway||$1,063,456|
|3||National Pension||South Korea||$582,938|
|4||Federal Retirement Thrift||US||$531,489|
|6||National Social Security||China||$456,853|
|7||California Public Employees||US||$336,684|
|9||Central Provident Fund||Singapore||$269,133|
|11||California State Teachers||US||$216,193|
|12||Local Government Officials||Japan||$209,880|
|13||New York State Common||US||$201,263|
|14||Employees Provident Fund||Malaysia||$200,265|
|15||New York City Retirement||US||$189,794|
|16||Florida State Board||US||$167,900|