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Top 20 pension funds’ AuM declines for first time in seven years

ARLINGTON, Va., Sept. 03, 2019 (GLOBE NEWSWIRE) -- 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 Willis Towers Watson’s Thinking Ahead Institute.

The research 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.

“A tougher market environment in 2018 meant AuM growth paused, but the underlying trend remains one of growing pension markets worldwide,” said Bob Collie, head of Research for the Thinking Ahead Group. “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 organizations, they influence the whole market. It’s particularly notable that a majority of the largest funds are now highlighting the importance of sustainability. Environmental, social and governance 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%, while 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 annualized growth rate during the period 2013 to 2018 at 5.8%, while Europe and Asia Pacific had annualized 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 U.S. 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 U.S. continues to have the largest number of funds in the top 300 ranking (141), followed by the U.K. (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 reentered 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.

Top 20 pension funds (USD millions)

Rank Fund Market Total assets
1 Government Pension Investment Japan $1,374,499
2 Government Pension Fund  Norway  $982,293 
3 Federal Retirement Thrift  U.S.  $578,755
4 National Pension South Korea $573,259
5 ABP  Netherlands  $461,682
6 California Public Employees U.S. $376,859
7 National Social Security China $371,627*
8 Canada Pension Canada  $287,410
9 Central Provident Fund  Singapore $286,963
10 PFZW  Netherlands  $248,326
11 California State Teachers  U.S.  $230,209
12 New York State Common U.S. $213,241
13 Employees Provident Fund Malaysia $201,687
14 New York City Retirement U.S. $200,805
15 Local Government Officials Japan $199,522
16 Florida State Board  U.S.  $174,721
17 Texas Teachers U.S. $153,126
18 Employees’ Provident India $145,372*
19 Ontario Teachers Canada $140,123
20 ATP Denmark $129,110

*Estimated figures

About the Thinking Ahead Institute
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to changing and improving the investment industry for the benefit of the end saver. It has over 40 members around the world and is an outgrowth of Willis Towers Watson Investments’ Thinking Ahead Group, which was set up in 2002.

About Willis Towers Watson

Willis Towers Watson (WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Media contact

Ed Emerman: +1 609 275 5162
eemerman@eaglepr.com