Top 300 pension funds grow assets to record high

Pensioner-with-caneTotal assets of the world's largest 300 pension funds grew by US$1.2 trillion (€845bn) in 2010, according to data released today by the consultancy Towers Watson.

The 11% increase compares to an 8% rise in 2009 and brought total assets to US$12.5 trillion – a record high.

But annualised growth of all funds during the past five years has fallen to just over 6%, the P&I/Towers Watson global 300 ranking shows.

By individual region, Europe has the highest five-year growth rate of 11% compared to Asia (9%) and North America (1%); while the Latin American and African regions combined have a growth rate for the same period of 15%, albeit from a low base.

The research also shows that the world's top 300 pension funds now represent over 47% of global pension funds assets.

Defined benefit funds account for 70% of assets and grew by 8% in 2010, compared to 13% for defined contribution funds and 21% for reserve funds.

Chris Ford, EMEA head of Investment at Towers Watson, said: "The world's largest pension funds have changed their asset mix during the past five years to be more defensive partly due to ongoing volatility and an unpredictable growth environment, with the top 20 funds, on average, now having equal amounts in equities and bonds [around 40% each] and the rest in alternatives and cash.

“At the same time Asia-Pacific funds, in particular Japan, have maintained much higher allocations to bonds in keeping with prevailing investment beliefs there and which explains their now 50% share of top 20 fund assets."

The order of market share of each country in terms of pension funds assets is: US 34%;  Japan 19%;  the Netherlands 6%; UK and Canada joint fourth with 5% each.

The research shows that 54 new funds have entered the ranking during the past five years mainly from Australia (11), Denmark (5), Mexico (4), Germany (4) and Finland (4).

During the same period, the US and UK combined have had a net loss of 45 funds from the ranking, yet together still account for just under half of all funds. In 2010, two Russian funds joined the ranking for the first time, including the National Wealth Fund with assets of US$88 billion.

Brazilian funds grew at the fastest rate during the five-year period to the end of 2010, 22% in US$ terms, followed by Australia with 19%. During the same period the top Taiwanese, Mexican, Danish and Swedish funds grew at 13%, 11%, 9% and 8% respectively, in US$ terms.

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