The largest pension and sovereign wealth funds in the world – especially Australian super funds – are continuing to grow faster than their peers, according to the latest annual Watson Wyatt survey.
The survey, undertaken jointly with Pensions & Investments magazine, lists the top 300 pension funds according to size, along with 22 sovereign wealth funds, including Australia’s Future Fund.
There are 13 Australian funds on the total list, accounting for 2.1 per cent of the world universe’s assets. This has pushed the Asia-Pacific region funds to overtake those of continental Europe in the survey for the first time, with a combined US$3 trillion against Europe’s US$2.5 trillion.
While the assets of most funds fell last year, the total of the top 20 funds was down only 4 per cent, compared with an average decline of 13 per cent for the rest of the funds in the survey. The figures include both investment returns and contributions.
Martin Goss, Watson Wyatt’s Australian head of investment client consulting, said large pension and sovereign wealth funds around the world had been prioritising governance to build long-term investment frameworks and develop decision-making structures that take advantage of new investment ideas.
“They have also used their size to their advantage by ensuring their various activities add up to a value proposition for beneficiaries,” he said. “Among other things, these leader funds continue to set the benchmark in most aspects of investment.”
The total assets of the top 300 funds fell 13 per cent to US$10.4 trillion during 2008, but compound annual growth remains around 10 per cent annual for the past five years.
The US retains its number one ranking with the largest share of assets among the top 300 pension funds, but this has slipped from 53 per cent to just on 40 per cent over the past five years. Japan is still number two, with 19 per cent, largely because of its biggest (and the world’s biggest) fund, the Government Pension Investment Fund of Japan, which has about US$1.3 trillion in assets.
The 13 Australian funds in the total 300 rankings are: Future Fund (ranked 52nd), State Super (100th), Australian Super (120th), UniSuper (155th), QSuper (144th), ARIA (202nd), First State Super (230th), REST (251st), HESTA (271st), Cbus (279th), and new funds to the list ESS Super (205th), Sunsuper (272nd) and Telstra Super (297th).
The Australian funds’ assets are measured as June 30 (against December 31 for some of the others) but are converted to US dollars as at December 31.