While the largest of the world’s pension funds have tended to grow faster than the rest in recent years, they did not do so last year, as non-US funds, especially Australian funds, grew at a faster clip.
The annual Watson Wyatt/Pensions & Investments survey of the world’s top 300 pension and sovereign wealth funds shows that US funds’ assets have dipped below 50 per cent of the worldwide assets of pension funds – down to 49 per cent from 58 per cent when the survey commenced in 2002. US funds make up 10 of the top 20 funds in the world. The top 20 funds still account for 36.5 per cent of the $US11.9 trillion accounted for by the top 300 funds. They also make up 161 of the funds by number. But the 86 European funds in the survey have grown by an average of 21 per cent a year in the past five years, against an average growth of 13 per cent for the US funds. Australia, which has 11 funds in the top 300 with assets representing 2 per cent of the world, outstrips the rest for growth with an average annual rate of 27 per cent. Funds in Asia-Pacific grew last year for the first time in three years, with their five-year growth rate matching the Europeans at 21 per cent. Graeme Miller, head of Watson Wyatt investment consulting in Australia, said that some of the largest funds in the survey were reaching maturity – either in the drawdown phase or close to it. He added that when governments paid in a fixed amount to the funds this was a smaller proportion of the very large fund assets than their smaller counterparts, therefore not contributing as much to overall fund growth. Watson Wyatt estimates that the top 300 funds account for 42 per cent of global pension assets. The largely stagnant Government Pension Investment Fund of Japan remains the largest with $1.072 trillion. The 11 Australian funds (and their rankings) in the top 300 are: . The Future Fund (66), $44.35 billion (as at January last year) . State Super (89), $34.14 billion . Australian Super (122), $25.10 billion . UniSuper (125), $23.76 billion . QSuper (144), $20.54 billion . ARIA (187), $15.79 billion . First State Super (231), $13.09 billion . REST (239), $12.76 billion . Hesta (261), $11.61 billion . Cbus (276), $10.77 billion . Telstra Super (296), $9.86 billion. Three of the Australian funds were new entrants to the list: Telstra, Hesta and Cbus. Another Australian fund, Sunsuper, would also have qualified, with more than $10 billion in assets.
Future Fund chief investment officer Ben Samild said that FY24 has been a great year for alpha creation, thanks to strong returns in equities and, unusually, across multiple hedge fund strategies all at the same time. He reflected the past few years have been “a difficult time to be an asset owner and to generate positive returns for risk assets” but the Future Fund is tracking well of its long-term mandate.
Simon Hoyle and Darcy SongSeptember 4, 2024
