Report: World’s top 300 pensions grow 6.1% in 2016

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06 Sep, 2017

Report: World’s top 300 pensions grow 6.1% in 2016

The world’s 300 largest private pension funds saw a 6.1% increase in 2016, representing a total of $15.7 trillion, according to new research.

After a 3.4% decline in 2015, end of year data from 2016 revealed a return to growth, while cumulative growth in assets is at 23.4% since 2011. The top 20 funds by asset size saw an asset increase of 7.1%. According to the report by WTW, these pensions represent 43.2% of global pension assets, higher than the 42.5% in 2015.

The figures reveal that the largest annualized growth rate over the last five years came from North American funds, growing by 6.7%. While at a slower pace, European and Asia-Pacific-based funds also grew at 3.1% and 2.8%, respectively.

Within the top 300 private funds, the US continued as the country with the biggest aggregate share of pensions assets, representing 38.6% across 134 funds. Canada assumed the UK’s former position as the fifth-largest country by share of pension fund assets at 5.4% (up 0.1% from 2015). The UK slid from 5.4% in 2015 to 4.8% in 2016.

Since 2012, 28 new funds entered the ranking, with US firms contributing a sizeable 13 of them. The highest net losses were experienced by Germany and Mexico, losing a net of 4 funds each. Currently, the US stands as the country with the largest number of funds, standing at 134, followed by the UK’s 26, and Canada’s 18. Rounding out the top five were Japan and Australia, who each had 16 funds.

Global investment veteran spearheading the research, Roger Urwin, said: “If asset owners are to successfully capture the long-term premium, it is imperative that they continue to expand their skill-sets, particularly in a continued lower-return environment which looks set to remain a feature of the industry going forward.

“A central characteristic of leader funds has been on their ability to innovate, rather than to rely on practices which may have worked in the past, whether that be through more streamlined asset allocation, uses of factor strategies and other smart betas, and better methods of accessing private markets. Increased interest in sustainability, both in integrated ESG practices and stronger stewardship practice, is one further innovation that was notable in 2016.”

The report also showed a 5.6% increase in defined benefit assets in 2016. Defined contribution plans, reserve funds, and hybrid funds also grew by 9.6%, 3.9%, and 2.9%, respectively.

DB assets accounted for 65.5% of the disclosed total assets under management, a negligible slide from 65.9% in 2015. DC assets rose from 21.5% in 2015 to 22.2%. Reserve funds and hybrid funds are slightly down at 11.5% and 0.8%, respectively, compared to 2015’s respective 11.7%, and 0.9%.

Sovereign pension fund assets saw a 6.5% increase over the period, smashing 2015’s dismal 0.8% decrease.

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