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Global pension fund assets rebound 15% to $46.73 trillion in 2019, study says

Global pension fund assets rebounded last year, growing 15.21% to US$46.73 trillion from $40.56 trillion in 2018 driven by strong gains in stock markets, according to an annual study from a research group backed by London-based multinational risk management, insurance brokerage and advisory firm Willis Towers Watson.

"This represents a significant swing in fortunes from 2018, which saw an overall 3.3% decline in global pension assets," Thinking Ahead Institute, a not-for-profit research group, says in a statement accompanying the report released on February 10.

The study is based on pension assets in the world’s 22 largest markets. The US leads with a 62.5% share of assets, followed by the UK and Japan with 7.4% and 7.2%, respectively.

The three countries, together with Australia, Canada, Netherlands and Switzerland, account for 92% of total pension assets in the 22 markets.

Last year, these seven markets allocated an average 45% of pension assets to stocks, 29% to bonds, 23% to alternative or non-mainstream assets, and 3% to cash.

The US and Australia allocated more to stocks while Japan, Netherlands and the UK have greater exposure to bonds.

Japan’s pension asset allocation to stocks dropped to 27% in 2019 from 37% in 2009, unlike the other six markets which either increased or maintained their allocations. The report doesn’t provide a reason for the decline among Japanese pension funds.

Meanwhile, the study also found a "noticeable pick-up in the decade-long trend of funds developing strong strategies around their people", according to Marisa Hall, co-head of the Thinking Ahead Institute.

She says larger funds, particularly those with more than $25 billion of assets, continued to build bigger and more sophisticated internal teams with strong leadership through chief executives and chief investment officers, and greater role specialisation in asset classes such as private markets.

“Smaller funds are continuing to outsource all or part of their CIO-type decisions and we expect this to continue,” Ms. Hall says in the statement.

Established in 2015, London-based Thinking Ahead Institute comprises more than 40 asset owners, investment managers and related groups with combined assets of over $12 trillion.