Assets of APAC pension funds record fastest annualised growth among peers

Photographer: Akio Kon/Bloomberg via Getty Images

Asia-Pacific (APAC) pension funds beat their peers in terms of asset value growth in 2019, showed a report on the world’s top 300 pension funds by the Thinking Ahead Institute.

Assets under management (AUM) of the top 20 pension funds grew 8.1 per cent year-on-year in 2019, led by a 10.6 per cent growth in the assets of APAC funds. The AUM of funds in the US and Europe, within the top 20, rose by 2.9 per cent and 8.6 per cent, respectively.

The APAC region accounted for 44 per cent of assets managed by the 20 biggest funds last year, compared with 43 per cent in 2018, the research showed.

The Government Pension Investment Fund of Japan remained perched on top as the world’s largest pension fund, with $1.6 trillion in AUM. This is over 40 per cent more than the second-biggest fund, the Government Pension Fund of Norway, which has $1.1 trillion in AUM.

Many Asian funds in the list improved their ranking by one notch compared with 2018. This includes The National Pension Fund of South Korea (Rank 3), Singapore’s Central Provident Fund (Rank 8), Malaysia’s Employees Provident Fund (Rank 12) and Employees’ Provident in India (Rank 17).

Top 20 pension funds (in $ million)*

Expand Table

2018 Rank2019 RankFundMarketTotal Assets
11Government Pension Investment FundJapan$1,555,550
22Government Pension FundNorway$1,066,380 ¹
43National Pension FundSouth Korea$637,279
34Federal Retirement ThriftUS$601,030
55ABPNetherlands$523,310
66California Public EmployeesUS$384,435
77National Social Security FundChina$361,087 ¹
98Central Provident FundSingapore$315,857
89Canada PensionCanada$315,344 ²
1010PFZWNetherlands$243,839 ²
1111California State TeachersUS$243,311
1312Employees Provident FundMalaysia$226,101
1513Local Government OfficialsJapan$224,006
1214New York State CommonUS$215,424
1415New York City RetirementUS$208,458
1616Florida State BoardUS$173,769
1817Employees’ ProvidentIndia$168,095 ¹
1918Ontario TeachersCanada$159,666
1719Texas TeachersUS$157,632
2020ATPDenmark$144,983

* US funds’ data is as of September 30, 2019.
* Non US funds’ data is as of December 31, 2019, except where shown:
¹ Estimate
² As of 31 March 2020

On a weighted average for the top 20 funds, assets are predominantly invested in equities (45.4 per cent), followed by fixed income (36.8 per cent) and alternatives and cash (17.8 per cent). Based on weighted average allocations by region, APAC funds had the largest portfolio of fixed income investments (51.7 per cent), while North American and European funds have mainly invested in equities (43.9 per cent and 50.9 per cent, respectively).

Overall, the world’s 300 largest pension funds witnessed an 8 per cent increase in value in 2019, in contrast to the 0.4 per cent decline the year before. They now collectively manage $19.5 trillion in assets. APAC holds the second largest share in terms of assets managed by the top 300 pension funds (26.6 per cent), behind  North America (43.8 per cent).

Funds in the APAC region experienced the fastest annualised growth in the five-year period since 2014 (7 per cent), compared with 4.9 per cent for the top 300 funds. The top 20 funds clocked 5.5 per cent average growth in 2014-19.

“Asia-Pacific pension funds have experienced exceptional growth over the last five years compared to their North American and European counterparts,” noted Jayne Bok, head of investments in Asia at advisory company Willis Towers Watson. Thinking Ahead Institute is the research arm of UK-based Willis Towers Watson.

“However, the road ahead is looking increasingly uncertain, with geopolitical tensions, climate crises and the ongoing COVID-19 pandemic making financial markets increasingly volatile,” he continued, adding that funds can diversify their portfolios by increasing allocations to new and emerging asset classes such as Chinese equities, which “have proven to be highly resilient during COVID-19”, as well as Environmental, Social, and Governance (ESG) investments.

“Large funds are typically using best-practice governance to manage these complex agendas [caused by COVID-19 and economic uncertainty] and retain a strategic focus,” said Roger Urwin, co-founder of the Thinking Ahead Institute.

“One of their top priorities now is harnessing the power of data and technology, an area where the pensions industry has generally lagged other areas of business and finance. Notwithstanding the significant costs of investing in new technologies, and the challenges of managing data, these two areas are critical tools in improving the people, processes, and information that will determine which funds prosper in the years ahead,” he added.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.