Mon, Feb 24, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Top 20 pension funds' AUM declines for first time in seven years

Monday, September 02, 2019
Opalesque Industry Update - Assets under management (AUM) at the world's 300 largest pension funds fell in value by 0.4% to a total of US$18 trillion in 2018, in sharp contrast to an increase of 15.1% in 2017, according to the latest World 300 research from the Thinking Ahead Institute.

The research, conducted in conjunction with Pensions & Investments, a leading U.S. investment newspaper, shows that the value of the top 20 pension funds' AUM fell by 1.6% in 2018, equating to 40.7% of the total AUM in the rankings. This is the first year since 2012 that the top 20 funds' share of the total AUM has fallen. However, the top 20 funds' growth rate of 4.7% during the period 2013 to 2018 remained higher than the growth rate of 3.9% for the top 300 funds during the same period.

Bob Collie, Head of Research for the Thinking Ahead Group, said: "A tougher market environment in 2018 meant AUM growth paused, but the underlying trend remains one of growing pension markets worldwide. The pace of change in the investment world is a challenge, and scale is a huge advantage in a lot of ways. Many of the most interesting and important developments start with the largest funds, and as new investment ideas like the total portfolio approach and universal ownership gain traction in these organisations, they influence the whole market. It's particularly notable that a majority of the largest funds are now highlighting the importance of sustainability. ESG factors are now significant financial considerations. Beyond that, there's also an evolving recognition of the role large investors play within society, and the responsibility that comes with it."

Among the top 300 funds, defined contribution (DC) assets increased by 5.1% during 2018, while defined benefit (DB) assets declined by 0.2%. DB funds account for 64.7% of the total AUM, with this share remaining unchanged from the previous year. However, the share of DB funds slightly decreased across all regions - with the exception of Europe where the same level was maintained. DB plans dominate in Europe, North America and Asia-Pacific where they represent 53.7%, 74.2% and 65.1% by assets respectively, whereas DC plans dominate 70% of assets elsewhere, particularly in Latin American countries.

The share of reserve funds (those set aside by a national government against future liabilities) decreased by 9.5%, whilst hybrid fund assets (those with both DB and DC components) decreased by 4.6%.

Sovereign and public sector pension funds account for 68.5% of the total AUM in the ranking, with 145 funds in the top 300. Sovereign pension funds represent US$5.1 trillion in assets, while sovereign wealth funds account for US$7.9 trillion.

North America remains the largest region in terms of AUM and number of funds, accounting for 45.2% of all assets in the research, followed by Asia-Pacific (26.2%) and Europe (24.9%). Asia-Pacific's AUM and fund share has declined after several years of expansion, while Europe's share has fallen to the lowest value in five years. During the same period, African and Latin American funds' AUM increased by 0.7%. North America had the fastest annualised growth rate during the period 2013 to 2018 at 5.8%, while Europe and Asia-Pacific had annualised growth rates of 0.5% and 5.2% respectively.

A total of 26 new funds entered the top 300 in the last five years, with the US contributing the greatest net number of new funds (15). In contrast, Germany experienced the highest net loss of funds during the same period (6). The US continues to have the largest number of funds in the top 300 ranking (141), followed by the UK (24), Canada (17), Australia (16) and Japan (15).

On a weighted average for the top 20, assets are predominantly invested in equities (44.5%) followed by fixed income (37.2%) and alternatives and cash (18.3%). Regarding weighted average allocations by region, Asia-Pacific funds are predominantly invested in fixed income (53.8%), while North American funds are largely invested in equities (46.7%). European funds have demonstrated a more balanced allocation between equities and fixed income, at 49.1% and 36.2% respectively.

Denmark's ATP re-entered the top 20 funds, having dropped out a year ago, and South Africa's GEPF fell out of the top 20 to 21st place in the ranking.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Venture debt: Is it a loan? Is it equity? Is it an pportunity?, PE, VC investments in India hit all-time high in 2019[more]

    Venture debt: Is it a loan? Is it equity? Is it an pportunity? From Forbes: Venture Capital is usually the default option for fast-growth startups looking for a cash injection, thanks to our willingness to take risks in return for equity, and with no need to pay anything back - at least

  2. Other Voices: Evolution of shrinking hedge fund fees - what do investors and managers need to know?[more]

    By Don Steinbrugge, Founder and CEO, Agecroft Partners (DonSteinbrugge@agecroftpartners.com): Hedge funds fees remain under extreme pressure across the industry. This strong trend is driven by declining return expectations from investors, inc

  3. PE/VC: No handshakes, no deals: Silicon Valley VCs hit pause on China, US private equity funds swoop on UK for cheap deals[more]

    No handshakes, no deals: Silicon Valley VCs hit pause on China From Nikkei: Venture capital companies in Silicon Valley are not taking any chances when it comes to the coronavirus outbreak. "Due to the Coronavirus, No Handshakes Please. Thank You," reads a sign on the office doors of An

  4. COVID-19: Investors track ships, chase rumours to get edge on COVID-19 risks, Coronavirus risk puts the bull run on pause, China was wise to let markets stumble[more]

    Investors track ships, chase rumours to get edge on COVID-19 risks From Reuters: As investors crunch numbers to determine how the coronavirus will hit China's economy, hedge fund manager Nathaniel Polachek has tied much of his outlook to the fate of a ship anchored near Weihai, China.

  5. Bruce Berkowitz is back!, Coatue's new quant fund lost money in the fourth quarter[more]

    Bruce Berkowitz is back! From Institutional Investor: Famed value investor Bruce Berkowitz has hit hard times over the past decade, with big bets on losers like Eddie Lampert's Sears Holdings. In fact, over the past 10 years, his Fairholme Fund's annualized return is only 4.89 percent -