Fastest growth – but looming funding shortfall crisis
The largest North American pension funds have outpaced global peers and Canada has overtaken one of the powerhouses of global finance.
Worldwide, the 300 largest funds saw growth of 6.1% in 2016 to a total U$15.7 trillion and while European funds gained 3.1% and Asia-Pacific’s grew 2.8%, North American funds soared 6.7%.
This represented a return to growth following a 3.4% decline in 2015. Sovereign pension fund assets returned to growth in 2016, swelling by 6.5% over the period. This follows a decrease of 0.8% in 2015.
Canada’s largest pension funds saw their share of the assets under management globally grow to 5.4% (up from 5.3% in 2015) to outrank the UK which slipped to 4.8% last year from 5.4% in 2015.
The research was conducted by Towers Willis Watson and shows that the world’s largest funds in 2016 managed 43.2% of pension assets, up from 42.5% a year earlier.
Challenges continue for the industry though, notably finding attractively priced assets at acceptable risk levels.
“This is increasingly hard and reduces the shine from a year in which, the largest asset owners have been able to achieve superior growth in this year’s figures,” said Roger Urwin, global head of investment content at Willis Towers Watson.
He added that the leading asset owners have adapted to constant changes with improved governance and by learning from their peers. This, Urwin says, will be a key factor in future success.
The top five pension funds by assets under management are led by Japan’s Government Pension Investment (U$1.24 trillion) and includes funds from Norway, US, South Korea and the Netherlands.
Canada’s largest fund is Canada Pension at number 8 in the rankings with U$236 billion and Ontario Teachers is next at 18th in the world with $131 billion (all figures are for 2016).
Canada Pension also ranks as the fifth largest sovereign pension fund in the world behind Japan, Norway, South Korea and China. With no federal sovereign fund, the US does not feature.
“If asset owners are to successfully capture the long-term premium, it is imperative that they continue to expand their skill-sets, particularly in a continued lower return environment which looks set to remain a feature of the industry going forward,” concluded Urwin.
Worldwide, the 300 largest funds saw growth of 6.1% in 2016 to a total U$15.7 trillion and while European funds gained 3.1% and Asia-Pacific’s grew 2.8%, North American funds soared 6.7%.
This represented a return to growth following a 3.4% decline in 2015. Sovereign pension fund assets returned to growth in 2016, swelling by 6.5% over the period. This follows a decrease of 0.8% in 2015.
Canada’s largest pension funds saw their share of the assets under management globally grow to 5.4% (up from 5.3% in 2015) to outrank the UK which slipped to 4.8% last year from 5.4% in 2015.
The research was conducted by Towers Willis Watson and shows that the world’s largest funds in 2016 managed 43.2% of pension assets, up from 42.5% a year earlier.
Challenges continue for the industry though, notably finding attractively priced assets at acceptable risk levels.
“This is increasingly hard and reduces the shine from a year in which, the largest asset owners have been able to achieve superior growth in this year’s figures,” said Roger Urwin, global head of investment content at Willis Towers Watson.
He added that the leading asset owners have adapted to constant changes with improved governance and by learning from their peers. This, Urwin says, will be a key factor in future success.
The top five pension funds by assets under management are led by Japan’s Government Pension Investment (U$1.24 trillion) and includes funds from Norway, US, South Korea and the Netherlands.
Canada’s largest fund is Canada Pension at number 8 in the rankings with U$236 billion and Ontario Teachers is next at 18th in the world with $131 billion (all figures are for 2016).
Canada Pension also ranks as the fifth largest sovereign pension fund in the world behind Japan, Norway, South Korea and China. With no federal sovereign fund, the US does not feature.
“If asset owners are to successfully capture the long-term premium, it is imperative that they continue to expand their skill-sets, particularly in a continued lower return environment which looks set to remain a feature of the industry going forward,” concluded Urwin.
