Sovereign wealth funds (SWFs) now make up a record share of assets among the largest 100 global asset owners, according to research by the Thinking Ahead Institute (TAI), a network founded by WTW.
According to the TAI’s research, SWFs now make up 38.9% of total assets among the world’s largest 100 asset owners. In absolute terms, they represent $9.1trn.
This has risen as a proportion due to a slower correction in collective assets among turbulent markets. SWFs saw the combined effects of relative investment performance and new inflows outperform over the past 12 months compared with other types of asset owner.
As a result, pension funds only just retain the majority share of assets under management (AUM) among the largest 100 asset owners, with the combined assets of pension funds making up 52.8%. Outsourced chief investment officers and master trusts are responsible for the remaining 8.3% of total AUM in the top 100 asset owners, TAI found.
This marks a decline over the medium term, TAI said. Five years ago, pension funds made up more than 60% of the top 100 asset owners, while SWFs represented 32%, or less than one third.
Taken as a whole, the world’s 100 largest asset owners are now responsible for $23.4trn as of the end of 2022, a decline of nearly 9%.
IPE’s latest Top 1000 European Pension Funds analysis, carried out earlier this year, found that the assets managed by European pension funds fell by 7% over 12 months, to €8.95trn of retirement savings.
According to the TAI study, the largest 20 asset owners in the world now have a total of $12.9trn, representing 55.2% of the total AUM in the top 100. The Government Pension Investment Fund of Japan remains the largest asset owner in the world, with an AUM of $1.4trn.
North America accounts for 33.9% of total AUM in the top 100 asset owners study, making it the largest region by asset value, closely followed by Asia-Pacific with 33.7% of total AUM. EMEA represents 32.4% of total AUM.
“The disruption caused by elevated inflation and increased interest rates has affected equity and bond markets on a global scale, putting extra pressure on asset owners to reassess and adjust their strategies,” said Jessica Gao, director at the Thinking Ahead Institute.
“The shift from an era of low inflation and interest rates has given a rise to a new macroeconomic landscape that demands a fresh understanding and management approach. This is impacting different types of asset owner in different and unexpected ways.”
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