Research conducted by the Thinking Ahead Institute in conjunction with US-based Pensions & Investments newspaper found that AUM at the world’s top 300 pension funds increased by 11.5% in 2020. The study provides high-level information on trends in the pension funds industry and gives information on how funds have changed.
North America remains the largest region regarding AUM, at 41.7% of assets. The region is followed by Asia-Pacific, at 27.5%, and Europe, at 27.5%, with the former having the largest annualised growth rate over the last five years at 9.9%. North America also has the highest number of funds, at 138, followed by the UK, 23, and Canada, 18.
Defined benefit schemes dominate, covering 63.4% of total AUM.
The top 20 pensions funds’ AUM grew by 14.6%, the second highest annual growth rate since 2004.
Marisa Hall, co-head of the Thinking Ahead Institute, says: “Overall, the world’s largest pension funds grew strongly in 2020, yet the pandemic has also been a stark reminder of how the world is more interconnected and uncertain today than ever before. Pension fund boards are increasingly focused on managing many of the headwinds that have arisen from a ‘new normal’ of lower-for-longer interest rates. This has prompted concerns around solvency and led some schemes to increasingly stretch their risk budgets in order to meet return targets. Additionally, managing rising ESG expectations have created their own set of challenges and opportunities.”