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Top 20 pension funds' assets decline in 2018 for first time in seven years

By Asia Asset Management  
Sep 4, 2019

Assets of the world’s top 20 pension funds declined last year for the first time since 2011, dragged by tough market conditions, according to Thinking Ahead Institute, the research unit of investment advisory firm Willis Towers Watson.

Assets under management (AUM) of the 20 funds fell 1.6% to US$7.33 trillion in 2018, following a 17.4% gain in 2017, the research firm says in a report on September 2.

They include Japan’s Government Pension Investment Fund and South Korea’s National Pension Service, the world’s first and fourth largest pensions, respectively.

The 20 top funds accounted for 40.7% of the assets of 300 global pensions in 2018, down from 41.1% the previous year, the first time the share has dropped since 2012.

Combined AUM of the 300 funds fell 0.4% to $18 trillion last year after rising 15.1% in 2017.

“A tougher market environment in 2018 meant AUM growth paused, but the underlying trend remains one of growing markets worldwide,” Bob Collie, head of research at Thinking Ahead Institute Group, says in the report.

Despite the AUM decline, assets of the 20 top pensions grew 4.7% over the last five years, faster than the 3.9% rate for the 300 funds.

According to Mr. Collie, environmental, social and governance, and sustainability considerations have become a “notable” trend among the largest pension funds.

Overall, Asia Pacific-based pensions accounted for 26.2% of the assets of the 300 funds, the second largest region after North America at 45.2%, and ahead of Europe at 24.9%.

The Asia Pacific funds’ assets expanded 5.2% over the last five years versus 5.8% and 0.5%, respectively, for their counterparts in North America and Europe.

“Despite macro-economic and global trade headwinds, Asia is still a growing region with a young population, and its long-term growth trajectory remains positive. However, we should expect a general slowdown in growth in line with global markets,” Jayne Bok, head of investment in Asia at Willis Towers Watson, says in the report.

London-headquartered Willis Towers Watson currently has $2 trillion of assets under advisory globally.