Sovereign wealth funds are steadily increasing their share of assets. These funds now account for 38.9% of all assets under management among the world’s 100 largest asset owners by AUM, according to research from WTW’s Thinking Ahead Institute. Meanwhile, the value of the assets managed by these owners declined nearly 9% to $23.4 trillion in 2022.
SWFs in the study manage a collective $9.1 trillion, while pension funds within WTW’s Asset Owner 100 Index manage 52.8% of all AUM. According to the report, sovereign wealth funds accounted for 32% of AUM in 2017, while assets managed by pension funds made up 60% of AUM that year.
“Asset owners from sovereign wealth funds to pension funds have navigated a year when volatility and uncertainty in the global economy have been at their highest in a generation—with often divergent outcomes,” said Jessica Gao, associate research director at the Thinking Ahead Institute, in the report.
In North America, pension funds accounted for 75% of all assets in the top 100, while outsourced chief investment officer providers and sovereign wealth funds accounted for 23% and 2%, respectively. In the region covering Europe, the Middle East and Africa, pension funds accounted for 29% of assets, while sovereign wealth funds accounted for 71% of all assets, which WTW attributed to the prominence of Middle Eastern sovereign wealth funds. In the Asia Pacific region, pension funds and SWFs accounted for 55% and 44% of AUM, respectively.
The largest 20 asset owners currently manage $12.9 trillion and make up 55.2% of AUM of the 100 largest asset owners. The five largest asset owners—four of which are SWFs—collectively manage 24.4% of all AUM within the top 100, worth $5.7 trillion:
- Government Pension Investment Fund (Japan; pension fund)
- Norges Bank Investment Management (Norway; sovereign wealth fund)
- China Investment Corp. (China; sovereign wealth fund)
- SAFE Investment Co. (China; sovereign wealth fund)
- Abu Dhabi Investment Authority (United Arab Emirates; sovereign wealth fund)
The report indicated multiple shifts in strategy observed by WTW in 2022.
“New risk methodologies are emerging, from the old view of strategic asset allocation toward leading funds adopting a total portfolio approach (TPA)—where goals are the central driving force and best ideas are incorporated through a competition for capital at the total portfolio level,” Gao said in the statement. “Meanwhile, we’ve also noticed a renewed emphasis on positive culture, when markets put asset owners and their teams under pressure.”
The report also detailed topics, trends and challenges on the minds of asset owners. For example, according to the report, nine of the top 20 asset owners reported recognizing the significance of artificial intelligence, while two mentioned they are using AI to make climate action decisions.
“Globally significant asset owners are showing greater awareness and planning for globally significant trends,” Gao said.
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Tags: AO100, Asset Owners, Jessica Gao, sovereign wealth funds, WTW, WTW Thinking Ahead Institute