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3 super funds top local performers in global study

Glenn Freeman  |  11 Sep 2017Text size  Decrease  Increase  |  

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Australia and Japan have the highest number of top-performing superannuation and pension funds in the Asia Pacific region, with 16 each, a new study has found.

 

The Global Pension Asset Study of the 300 largest pensions funds globally is conducted annually by Willis Towers Watson, a multi-national advisory and broking company. It gathers data on total assets, asset allocation, and plan structure for employee super plans--frequently known as pension plans outside Australia--in 22 countries across Asia, Europe, the US, and UK.

Three Australian funds ranked inside the top 100, with industry super fund QSuper the top down-under fund in the study, in 72nd position with $48.8 billion in FUM.

First State Super ranked 90th (US$42.7 billion) and UniSuper 92nd (US$39.8 billion), with REST (US$31.5 billion) and State Super (US$30 billion) occupying positions 125 and 133, respectively. Telstra Super scraped into the final spot, taking out position 300 with US$13.3 billion in FUM.

Australia ranked third in average annualised market growth between 2011 and 2016, up 13.8 per cent in local currency terms, behind Norway (17.5 per cent) and China (22.8 per cent).

 

2011-2016 Average annualised growth by markets
US$ terms vs. local currency terms

 chart

Growth rates were higher in local currency terms due to the strong appreciation of the US dollar against all major currencies. The only Chinese fund in the ranking showed the highest growth in US$ terms, while Brazilian, Japanese and Mexican funds experienced negative growth rates in US$ terms. Source: Willis Towers Watson

 

More broadly, five funds from the Asia Pacific region placed among the top 20 globally. Japan's Government Pension Investment Fund (US$1.2 trillion) took first place, ahead of South Korea's National Pension Service (US$462 billion) in fourth; and China's National Social Security Fund (US$349 billion) in sixth.

Japan's Pension Fund Association for Local Government Officials and Malaysia's Employees Provident Fund  ranked 13th and 15th, with US$183 billion and US$165.5 billion in FUM, respectively.

Some other standout findings from the study include:

  • The world's top 300 pension funds represent 43 per cent of the global universe of these assets.
  • This same group of funds' total assets under management increased 6 per cent in 2016, reversing the 3.5 per cent decline of 2015.
  • A cumulative growth rate of 23 per cent across all funds in the study was observed between 2011 and 2016.

In terms of asset allocation, the simple average portfolio for the top 20 funds shows that 41.7 per cent of total assets were invested in equities, 37.2 per cent in fixed-income securities, and 21.1 per cent in alternatives and cash.

The weighted average of the allocations shows a higher percentage of investment in both equity (44.2 per cent) and fixed income (37.6 per cent), and a decrease in alternatives & cash (18.2 per cent)--the latter reflecting low global inflation.

 

Total value of fund assets
Split by asset allocation of the top 20 funds

 chart

The simple average portfolio for the top 20 funds shows that 41.7% of the assets were invested in equities, 37.2% in fixed income securities and 21.1% in alternatives and cash.

The weighted average of the allocations shows a higher percentage of investment in both equity (44.2%) and fixed income (37.6%) and a decrease in alternatives & cash (18.2%).

Note: Asset allocation for the National Social Security fund of China was not available.

Source: Willis Towers Watson

 

Looking at the weighted average allocations by region, Asia-Pacific funds have largely invested in fixed income (54.2 per cent) while North American funds have predominantly invested in equities (46.5 per cent).

Europe and "other" markets showed a more balanced allocation between equities and fixed income (48.3 per cent and 37.3 per cent, respectively).

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Glenn Freeman is a Morningstar senior editor.

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