GLOBAL - There are now 75 pension funds in the European 'super league' - boasting more than €10bn in assets - and over 600 funds with assets of €1bn or more, according to IPE's Global Top 1000 ranking of leading institutional investors.

The number of European pension funds with assets of €10bn or more has risen from 57 in 2006, an increase of 24%.

The total has also risen steadily since then, with only a slight drop to 64 funds in the 2009 ranking.

The number of European pension funds with assets of €1bn or more followed the same pattern.

This year, there are 603 funds, up 19.4% from 2006, when there were 486 in the group.

Again, over the last five years, only 2009 saw a drop in the number of funds of more than €1bn.

Liam Kennedy, editor of IPE, said: "Despite the benefits of scale economies, asset growth represents a challenge for trustees and board members as they grapple with the governance of a large investment portfolio.

"Many of the effects of portfolio diversification diminish as assets grow."

Kennedy said the implementation of alternative investments, for example, was a "challenge", due to the high absolute levels of cash allocation needed to secure a meaningful level of diversification.

"Large pension funds, particularly in the public sector, also run high reputational risks as their funds command greater levels of scrutiny in national media," he said.

"While many such funds already run active shareholder engagement and responsible investment strategies, we predict demand for greater transparency from the public, the media, politicians and regulators."

Central and eastern European pension funds showed the highest levels of asset growth in Europe as a whole.

There were a total of 43 pension entities in the region, with total assets of €78.8bn, according to the survey.

A total 14 individual pension entities also had assets of more than €1bn.

Globally, total assets of entities in the 2010 IPE Top 1000 Global Institutional Investors, which includes best estimates for a number of sovereign wealth funds, is €12.44trn.

And reflecting the market upswing of 2009, the total figure for the Top 1000 European Pension Funds is €3.84trn, up from €3.4trn in 2009 and €3.7trn in 2008 - a year-on-year increase of 3.78%.

Where the assets of the top 15 global institutional investors (€4.1trn) account for some 33.5% of the total, for the top 15 European pension funds, this concentration is slightly lower at 28%.

The source for the Top 1000 Global Institutional Investor tables is International Pension Funds and their Advisers (the 'Red Book'), published by AP Information Services.

This is also the main source for the Top 1000 European Pension Fund tables and the tables for individual countries, although IPE has updated and added figures from a wide variety of sources, including its own research.

The 2010 figures in most cases relate to end-2009 - likewise, the 2009 and 2008 figures relate to the end of the previous year.

US pension funds account for 30% of the total assets of the Global Top 1000 ranking - the 360 US funds in the ranking have combined assets of €3.7trn.

Japanese funds, the next biggest investor group in the ranking, are responsible for 9.5% of the total assets (€1.2trn).

The UK accounts for 5.2% (€644.6bn), the Netherlands 5% (€612.3bn) and China 4.8% (€588.6bn).

These five countries hold more than half of the total global invested assets between them.

The IPE Global Top 1000 ranking is distributed as a supplement to the September issue of IPE magazine. For further details, please contact Emma Morgan-Jones (morgan.jones@ipe.com).
 

Topics