New research by the Thinking Ahead Institute has revealed that the world’s 100 largest asset owners had US$23.4 trillion in assets under management (AUM) at the end of 2022, 8.7 per cent lower than a year earlier, when this figure sat at US$25.7 trillion.
In 2022, pension funds (-13.6 per cent) and sovereign wealth funds (-3.2 per cent) both experienced negative growth, according to the Thinking Ahead Institute’s AO100 report.
But in a notable development, sovereign wealth funds made up a record 38.9 per cent (US$9.1 trillion) of the total assets among the world’s largest 100 asset owners.
The report attributed the increased share for sovereign wealth funds to “a slower correction in collective assets among turbulent markets”. Pension funds still made up a majority share of the total assets at 52.8 per cent, albeit down from more than 60 per cent five years ago.
“Asset owners from sovereign wealth funds to pension funds have navigated a year when volatility and uncertainty in the global economy have been at their highest in a generation – with often divergent outcomes,’ said Thinking Ahead Institute director Jessica Gao.
“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 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.”
Five Australian asset owners ranked in the global top 100, including AustralianSuper in 36th (US$174.4 billion) and the Future Fund in 42nd (US$165.0 billion).
Both AustralianSuper and the Future Future fund posted among the largest gains in the rankings between 2017 and 2022, moving up 17 places and three places, respectively.
Australian Retirement Trust was 45th (US$157.8 billion), Aware Super was 68th (US$99.3 billion), and N M Superannuation Proprietary Limited was 100th (US$72.3 billion).
Overall, the Government Pension Investment Fund of Japan (US$1.4 trillion) ranked highest. Two sovereign wealth funds – Norway’s Norges Bank Investment Management (US$1.3 trillion) and China Investment Corporation (US$1.1 trillion) rounded out the top three.
The AUM of the top 20 funds totalled US$12.9 trillion, representing 55.2 per cent of the total AUM of the top 100. The Thinking Ahead Institute said that this concentration was caused by a slower decline in asset values for the largest asset owners in the world.
The Asia-Pacific (APAC) region accounted for 33.7 per cent of the total AUM of the top 100, only slightly behind North America at 33.9 per cent and Europe, the Middle East and Africa (EMEA) at 32.4 per cent.
APAC funds had 47.9 per cent of their assets in equities – higher than any other region – followed by 35 per cent in fixed income and 17.1 per cent in alternatives.
“Globally-significant asset owners are showing greater awareness and planning for globally-significant trends. This has ranged, just in the last 12 months, from equally-existential questions of systemic risk – from climate to geopolitics and technology,” said Ms Gao.
“Such a breadth of threats and opportunities will require a delicate juggling act as investment organisations strive to balance their own internal investments.”
