Top 300 pension funds’ AUM grows 8% in 2019: research

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investing-stocks-graph © Rattanasiri Inpinta /123RF Stock PhotosThe world’s 300 largest pension funds saw their assets under management increase in value by eight per cent in 2019, to a total value of US$19.5 trillion, according to new research by Willis Towers Watson’s Thinking Ahead Institute.

This is compared to a 0.4 per cent decline in the value of assets in 2018. “Overall, the world’s largest pension funds staged a strong rebound in growth in 2019, following a tough market environment the year before,” said Roger Urwin, co-founder of the Thinking Ahead Institute, in a press release. “However, this positive result does not detract from the multiple pressures currently facing pension funds, from concerns around solvency levels to rising expectations with regards to [environmental, social and governance] considerations and, in particular, climate and social issues.”

Urwin also noted the ramifications of the coronavirus crisis and anticipated economic uncertainty ahead that will make pension fund boards’ agendas more complex.

When looking at the top 20 pension funds, assets under management saw an 8.1 per cent increase in 2019 and a compound annual growth rate of 5.5 per cent over the past five years, compared to 4.9 per cent for the top 300 funds.

Canadian funds in the top 20 list included the Canada Pension Plan Investment Board at No. nine and the Ontario Teachers’ Pension Plan at No. 18. No new pension plans made the top 20 in 2019 and the Government Pension Investment Fund of Japan kept the top spot, a position it has held since 2002.

On a weighted average basis, the top 20 pension funds’ assets were predominately invested in equities (45.4 per cent), followed by fixed income (36.8 per cent) and alternatives and cash (17.8 per cent). North American and European funds predominantly invested in equities, while fixed income was more popular in the Asia-Pacific region.

Geographically, North America remained the largest region in both assets under management and number of pension funds on the list, with 43.8 per cent of all assets covered in the research. The Asia-Pacific region, which followed at 26.6 per cent, saw the largest annualized growth rate during the last five years at seven per cent.

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