The US remain by far the world’s largest pension fund market

Monde
On the 02/18/21 at 7:57AM

by

Laurence Pochard

Pension fund AuM expanded further in 2020 despite the pandemic, based on a survey by Thinking Ahead Institute / Willis Towers Watson.

Up 11% in one year. Pension fund assets under management hit $52,522bn worldwide in 2020, according to the Global Pension Assets study of the Thinking Ahead Institute / Willis Towers Watson. The US is still the largest market, now with 62% of global assets, up from 52.6% in 2010. France accounts for just 0.3% of the market, with an estimated $166bn. Together, the US, the UK (6.8%) and Japan (6.9%) account for three quarters of global pension fund assets (76%).

Pension fund asset allocations on the seven largest markets average 43% in equities, 29% in bonds, 26% in other assets and 2% cash as of the end of 2020. This is quite far from the conventional allocation of 60% global equities and 40% global bonds that pension funds use as a benchmark. The benchmark allocation would have achieved a 13.2% return in 2020, the study found.

Alternative assets gained further ground

Among long-term trends found by the authors, the increase in assets allocated to non-listed assets is telling. Over the past 20 years, investments in real estate, private equity and infrastructure have risen from about 7% of the total to more than 26%. Alternative assets continued to attract inflows for their strong returns, which offset their governance challenges.