World’s Largest Pension Funds’ AUM Up 8% in 2019

The 300 largest pension funds in the world saw their assets under management (AUM) collectively increase 8% to approximately $19.5 trillion in 2019, reversing the previous year’s decline of 0.4%, according to a report from Willis Towers Watson’s Thinking Ahead Institute.

The report also said that the 20 largest pension funds, which account for 40.7% of the total assets under management saw their aggregate worth rise 8.1% during the year, while their compound annual growth rate (CAGR) over the past five years was 5.5%, compared with 4.9% for the top 300 funds during the same period. There were no new entrants in the top 20 funds during 2019.

The larger the pension fund, the higher its CAGR was over the period of 2014 to 2019, according to the findings. Over that time period, the top 20 funds had an CAGR of 5.5%, compared with 5.2% for funds ranked 21-50, 4.3% for funds ranked 51-150, and 3.9% for 151-300.

Diversification was singled out as the most important strategy for investment performance by 11 of the top 20 funds, while the remaining nine funds cited the importance of sustainable and responsible investment by implementing best practices in corporate governance to support the long-term value of the funds’ investments.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

“This positive result does not detract from the multiple pressures currently facing pension funds,” Roger Urwin, co-founder of the Thinking Ahead Institute, said in a statement. “We are still witnessing the ramifications from the COVID-19 crisis and, as we anticipate further economic uncertainty in the months ahead, these challenges make pension fund boards’ agendas more complex and stressed than at any previous time.”

Nearly half of the 300 funds (144) are sovereign and public sector pension funds and account for 68.3% of the total assets. Sovereign pension funds’ total assets were approximately $5.6 trillion, and sovereign wealth funds managed $8.2 trillion in assets. Meanwhile, defined benefit (DB) funds accounted for 64.2% of the total assets under management for all 300 pension funds, while defined contribution (DC) funds accounted for 24.2%.

The lion’s share (43.8%) of the assets reside in North America, while 26.6% of the assets are held by funds in the Asia-Pacific, followed by Europe with 25.8% of the total assets under management.

The report also said that, on a weighted average, 45.4% of the assets held by the 20 largest funds were invested in equities, while 36.8% were in fixed income, and 17.8% were in alternatives and cash. European and North American fund assets had the highest equities allocations at 50.9% and 43.9%, respectively, while 51.7% of Asia-Pacific fund assets were allocated to fixed-income investments.

Asia-Pacific had annualized growth of 7% during the period from 2014 to 2019, while North America and Europe had annualized growth rates of 5.1% and 2.8%, respectively, during the same time period.

Top 20 pension funds ($ millions)*

Rank	Fund	Market	Total Assets
1.	Government Pension Investment	Japan	$1,555,550
2.	Government Pension Fund	Norway	$1,066,380¹
3.	National Pension	South Korea	$637,279
4.	Federal Retirement Thrift	US	$601,030
5.	ABP	Netherlands	$523,310
6.	California Public Employees	US	$384,435
7.	National Social Security	China	$361,087¹
8.	Central Provident Fund	Singapore	$315,857
9.	Canada Pension	Canada	$315,344²
10.	PFZW	Netherlands	$243,839²
11.	California State Teachers	US	$243,311
12.	Employees Provident Fund	Malaysia	$226,101
13.	Local Government Officials	Japan	$224,006
14.	New York State Common	US	$215,424
15.	New York City Retirement	US	$208,458
16.	Florida State Board	US	$173,769

* US funds’ data is as of September 30, 2019.
* Non US funds’ data is as of December 31, 2019, except where shown:
¹ Estimate
² As of March 31, 2020

Source: Thinking Ahead Institute