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Assets at world’s largest pension funds return to growth

Value of top 300 funds rises by 6.1%, total assets under management now stand at $15.7 trillion

September 4, 2017

Assets under management at the world’s largest pension funds increased in value by 6.1% in 2016, representing a total of $15.7 trillion, according to the latest global 300 research from Willis Towers Watson.

LONDON, Monday 4 September 2017 – Assets under management at the world’s largest pension funds increased in value by 6.1% in 2016, representing a total of $15.7 trillion, according to research by Willis Towers Watson: The world's 300 largest pension funds – year ended 2016. The figures for year-end 2016 show a return to growth, following a 3.4% decline in 2015, whilst cumulative growth in assets since 2011 now stands at 23.4%. The top 20 funds by asset size in the research experienced a higher increase than the overall ranking, growing assets by 7.1% over the period. The research shows that the world’s top 300 pension funds together now represent 43.2% of global pension assets, rising from 42.5% in 2015, as estimated against figures from Willis Towers Watson’s Global Pensions Asset Study.

Roger Urwin, global head of investment content at Willis Towers Watson, said: “The search for attractively priced assets at acceptable risk continues to be a driving force in shaping the fortunes of pension funds and their ability to meet respective missions and objectives. This is increasingly hard and reduces the shine from a year in which, the largest asset owners have been able to achieve superior growth in this year’s figures. Central to this result has been the ability of leading asset owners to adapt to the ever-changing investment environment, through improvements in governance and the ability to learn from their peers. The desire of asset owners to implement best-practice and sound governance across their organisation has strengthened and will be a key factor in their future success.”

According to the research, North American funds showed the most noticeable annualised growth rate over the last five years, growing by 6.7% during the period. Funds from Europe and Asia-Pacific regions showed annualised growth rates of 3.1 % and 2.8% respectively. The U.S. continues to hold its position as the country with the largest share of pension assets across the top 300 funds, representing 38.6% spread across 134 funds. Meanwhile, Canada has overtaken the U.K. as the fifth largest country by share of pension fund assets, accounting for 5.4% (5.3% in 2015). The U.K. now accounts for 4.8%, falling from 5.4% of total assets in 2015.

A total of 28 new funds have entered the ranking over the last five years, with the U.S. contributing the most new funds (13) on a net basis. Germany and Mexico experienced the highest net losses over the period, losing a net four funds each. The U.S. has the largest number of funds within the top 300 ranking (134), followed by the U.K. (26), Canada (18), Japan and Australia (both 16).

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..”

Defined benefit (DB) assets increased by 5.6% in 2016, compared to 9.6% for defined contribution (DC) plans, 3.9% for reserve funds and an increase of 2.9% for hybrid funds. DB assets account for 65.5% of the disclosed total AUM, down from 65.9% in 2015, whilst DC assets have increased their share, rising from 21.5% in 2015 to 22.2%. Reserve funds remain relatively unchanged at 11.5% (11.7% in 2015), as do hybrid funds (0.8%, falling from 0.9% in 2015).

Sovereign pension fund assets returned to growth in 2016, swelling by 6.5% over the period. This follows a decrease of 0.8% in 2015.

Top 20 pension funds (US $ millions)

Rank Fund Market Total Assets  
1. Government Pension Investment Japan $1,237,636  
2. Government Pension Fund Norway $893,088  
3. Federal Retirement Thrift U.S. $485,575  
4. National Pension South Korea $462,161  
5. ABP Netherlands $404,310  
6. National Social Security China $348,662  
7. California Public Employees U.S. $306,633  
8. Canada Pension Canada $235,790 1
9. Central Provident Fund Singapore $227,102  
10. PFZW Netherlands $196,461 1
11. California State Teachers U.S. $193,871  
12. New York State Common U.S. $184,461  
13. Local Government Officials Japan $183,161  
14. New York City Retirement U.S. $171,574  
15. Employees Provident Fund Malaysia $165,464  
16. Florida State Board U.S. $153,942  
17. Texas Teachers U.S. $133,221  
18. Ontario Teachers Canada $130,642  
19. GEPF South Africa $119,186 2
20. ATP Denmark $113,160  

1. As of March 31, 2017
2. As of March 31, 2016

Largest sovereign pension funds (US$ millions)

Rank Fund Market Total Assets  
1. Government Pension Investment Japan $1,237,636  
2. Government Pension Fund Norway $893,088  
3. National Pension South Korea $462,161  
4. National Social Security China $348,662  
5. Canada Pension Canada $235,790 1
6. Central Provident Fund Singapore $227,102  
7. Employees Provident Fund Malaysia $165,464  
8. GEPF South Africa $119,186 2
9. Employees' Provident India $110,348  
10. Future Fund Australia $92,046  
11. Labor Pension Fund Taiwan $80,523  
12. National Wealth Fund Russia $70,836 3
13. Public Institute for Social Security 1 Kuwait $65,046 4
14. FRR France $37,861  
15. AP Fonden 3 Sweden $36,516  
16. AP Fonden 4 Sweden $36,245  
17. AP Fonden 2 Sweden $35,235  
18. AP Fonden 7 Sweden $33,607  
19. AP Fonden 1 Sweden $33,149  
20. Zilverfond Belgium $23,422  
21. Social Insurance Funds Vietnam $21,970  
22. Ireland Strategic Investment Ireland $21,770  
23. State Pension Finland $19,737  
24. New Zealand Superannuation New Zealand $19,397 5
25. Fonds de Comp./Securite Sociale Luxembourg $16,376  
26. Fondo de Reserva Seguridad Spain $15,796  
27. FEFSS Portugal $14,983  

1. As of March 31, 2017
2. As of March 31, 2016
3. As of January 1, 2017
4. Estimate
5. As of June 30, 2016

About Willis Towers Watson Investment

Willis Towers Watson’s Investment business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, assets under advisory of over US$2.3 trillion and over US$87 billion of assets under management.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: 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 40,000 employees serving more than 140 countries. 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.

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