The total combined assets of public pension funds, sovereign funds, and central banks grew to $33.5 trillion by the end of 2016, driven mostly by pension funds, according to a report from think tank Official Monetary and Financial Institutions Forum (OMFIF).
According to the OMFIF’s fourth annual “Global Public Investor” survey, which will be released June 14, worldwide pension fund assets increased $435 billion in 2016, while sovereign funds rose $143 billion, and central banks declined $103 billion.
The OMFIF classifies global public investors as institutions such as pubic pension funds, central banks, and sovereign funds which are linked by their status as public sector-funded entities, and represent a major part of world capital markets.
The report broke down the global assets geographically, and found that the Asia Pacific region remains the largest by assets under management, with $12.7 trillion, or 37.9% of all global assets. Asia had four of the 10 largest public investment institutions: the People’s Bank of China, the Bank of Japan/Ministry of Finance, Japan’s Government Pension Investment Fund, and the China Investment Corporation. North America is the second-largest, with $8.1 trillion, or 24%, while Europe is third with $6.4 trillion.
Europe’s increase in total assets was led mainly by central banks, with European assets under management rising $197 billion to $6.4 trillion. The Swiss National Bank, ranked seventh in the list, accounted for a rise of $76 billion, which the report said was due to intervention to hold down the Swiss franc, and strong returns on equities, making up one-fifth of Swiss reserves.
Total official gold holdings, which was at its highest level since 1999, increased by 377 tons, which was led by the central banks of Russia, China, and Kazakhstan. Turkey, Venezuela, and Azerbaijan saw the biggest decline in gold assets.
The report also said that there was a rise in assets related to what it called the “green economy,” although they still represent only a small portion of total assets. According to the survey, 38% of respondents said they will increase green bond investments over the next 12-24 months, while 35% said they will invest in renewables.
“Investments in green equity, fixed income, and alternative vehicles represent one way for public investors to achieve adequate returns while meeting low-carbon requirements,” said OMFIF in a statement. “Yet green finance remains beset by challenges, including over bond issue standardization.
Tags: Central Bank, OMFIF, Pension Funds