World's largest funds hit $12 trillion
The world's biggest pension and investment funds grew to $12 trillion (€8.3 trillion) last year and are in a strong position to deal with the financial market crisis of the past 12 months, thanks to a focus on funding strategies and beefed-up risk controls, according to the investment consultancy Watson Wyatt.
These factors helped the top 300 funds in the world grow by 14% during last year to a combined $12 trillion as of December 31, the consultancy said. The growth came despite a slide in global markets in the second half of the year.
The increase in assets was evenly spread across most countries, and the US has slid from more than half of the global total to about 43%, according to the annual survey. Watson Wyatt produces it in conjunction with Pensions & Investments, a US news magazine.
The survey also found that the very biggest funds - the top 20 - slowed their rate of growth as compared to the remaining 280, suggesting the world's second-rank investment funds are closing the gap on their jumbo-sized counterparts.
Sovereign wealth funds - defined as those pension pools under the direct control of governments - have continued to swell, now accounting for 23% of the total.
Carl Hess, Watson Wyatt's global head of investment consulting, said these big funds would be expected to become "investment leaders".
He said: "Large pension funds, notably the top sovereign funds, will continue to grow and be successful if they remain adaptable and prioritise excellent governance and risk management."
The largest state pension fund in the world is the Japanese Government Pension Investment Fund, a position it has held since 2002, with $1.1 trillion of assets. Norway's sovereign pension fund, which is financed by tax receipts on oil production, was the second-largest, just ahead of ABP, the Dutch civil servants' scheme.
Meanwhile, the fastest-growing pension system is that of Australia, where compulsory contributions for the entire working population have meant that retirement fund assets have burgeoned at an annual rate of 27% since 2002.
The UK is slated to introduce compulsory saving for a new national retirement scheme in 2012.
--write to mcobley@efinancialnews.com
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