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Alternative Market Briefing

Global pensions loading up on alternative investments says study

Tuesday, February 11, 2020

Laxman Pai, Opalesque Asia:

Global pension funds remain committed to increasing their exposure to private equity, real estate, and other alternatives, says a study.

A new report from Willis Towers Watson's Thinking Ahead Institute revealed that the shift to alternative assets continues apace and marks two decades of considerable change in pension fund asset allocation globally.

In 1999, just 6% of the seven largest market for pension assets (the 'P7') - Australia, Canada, Japan, the Netherlands, Switzerland, the UK, and the US - were allocated to private markets and other alternatives, compared to nearly a quarter of assets (23%) in 2019. This shift comes largely at the expense of equities and bonds, down 16% and 1% respectively, in the period.

The average asset allocation in the P7 market for pension assets is now equities 45%, bonds 29%, alternatives 23% and cash 3%.

Global retirement assets jump 15% to $46.73tn

Global retirement plan assets across 22 countries (P22) jumped in 2019 thanks primarily to strong equity markets, up 15% for the year to $46.73 trillion, said the Thinking Ahead Institute.

"The growth recovery was driven, in part, by strong gains in equity markets during the year with Mexico (22.2%), Canada (18.9%) and the US (17.8%) leading the way. This represents a significant swing in fortunes from 2018, which saw an overall 3.3% decline in global pension assets," it said.

The seven largest markets for pen......................

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