While value of top 300 funds globally rises by 6.1% in 2016, Australian funds in survey record 9.1% increase
MELBOURNE, Tuesday 5 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, as did Australian funds, showing a 9.1% increase in US dollar terms.
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.
In 2016, 16 Australian funds were included in the top 300 (the same 16 Australian funds as were included in the 2015 research), and 12 of those improved their ranking over the year.
The most improved Australian funds by ranking were HOSTPLUS (up 27 places), REST (up 14), SunSuper and HESTA (both up 13 places).
The Future Fund took the highest ranking for an Australian fund, at 32 overall. In addition, the Future Fund is ranked 10th highest by assets under management for a Sovereign fund linked to a pension purpose.
Of the 16 Australian funds, Telstra Super is once again the only corporate fund to make the top 300 this year. A total of 98 corporate funds were included in the survey, collectively accounting for 18% of total assets under management.
All told, Australian funds collectively account for 3.5% of the top 300 funds’ assets under management, up marginally from 3.4% a year earlier.
Alex O’Dea, Senior Investment Consultant at Willis Towers Watson in Australia, 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.
Alex O’Dea continued: “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, increasing by 6.5% over the period. This follows a decrease of 0.8% 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).
| 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 |
Footnotes:
1. As of March 31, 2017
2. As of March 31, 2016
| 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 |
Footnotes:
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
| Rank | Fund | Total Assets | ||
|---|---|---|---|---|
| 32. | Future Fund | $92,046 | ||
| 36. | AustralianSuper | $78,135 | ||
| 72. | QSuper | $48,870 | ||
| 90. | First State Super | $42,743 | ||
| 92. | UniSuper | $39,788 | ||
| 125. | REST | $31,499 | ||
| 133. | State Super | $30,057 | ||
| 140. | SunSuper | $28,544 | ||
| 141. | CSC | $28,327 | ||
| 145. | HESTA | $27,967 | ||
| 153. | Cbus | $26,670 | ||
| 220. | ESSSuper | $18,452 | ||
| 232. | GESB | $17,083 | ||
| 237. | Super SA | $16,867 | ||
| 255. | HOSTPLUS | $15,858 | ||
| 300. | Telstra Super | $13,335 |
Footnotes:
1. Fund data is as at 31 December, 2016.
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