Published by Asia Asset Management – 6th Sep 2018
Asia Pacific pension fund assets outperformed their global peers last year, thanks to strong performance of their regional investments, according to Willis Towers Watson, a UK-based investment consultancy.
The findings are based on a study of the top 300 global pension funds, 49 of which are based in Asia Pacific. The study was conducted earlier this year by Thinking Ahead Institute, a subsidiary of Willis Towers Watson.
It found that assets under management (AUM) of the 49 Asia Pacific funds rose 20% year-on-year to almost US$5 trillion at the end of 2017 versus a 15.1% increase for all 300 pension funds. The gains were much sharper than in the 2016 survey, where the figures were 7% and 6.1%, respectively.
The top 20 in the latest survey include seven Asian pension funds, including Japan’s Government Pension Investment Fund, South Korea’s National Pension Service, China’s National Social Security Fund, and Singapore’s Central Provident Fund.
Their combined AUM jumped 25.6% from 2016 to $3.3 trillion last year, accounting for 44.3% of total assets in the top 20 group, Williams Towers Watson says in a statement on September 3.
“Strong performance gains especially in [the Asia Pacific region] during 2017 helped boost many Asian pension funds,” Jayne Bok, head of investments for Asia at Willis Towers Watson, says in the statement.
But she adds that funds with a long-term horizon “should consider a broader opportunity set by looking beyond their home region and mainstream asset classes in order to maximise diversity and create resiliency” as the economic cycle matures, and recession risks rise.
Ms. Bok describes the past 12 months as a “period of change”, with Asian sovereign and public sector pension funds “seeking or taking actions to diversify investments”.
This, she says, is reflected by new mandates, such as sustainability-linked, environmental, social and governance, global infrastructure and alternative credits, awarded to fund managers.
