Sovereign wealth funds now make up a record share of assets among
the largest 100 global asset owners, according to new research by
leading global advisory, broking and solutions company WTW’s
(NASDAQ: WTW) Thinking Ahead Institute.
Sovereign wealth funds (SWFs) now make up 38.9%
of total assets among the world’s largest 100 asset owners (the
AO100). In absolute terms, sovereign wealth funds within the AO100
now represent $9.1 trillion. This has risen as a proportion due to
a slower correction in collective assets among turbulent markets —
after SWFs saw the combined effects of relative investment
performance and new inflows outperform over the past 12 months
compared with other types of asset owners.
As a result, pension funds only just retain the
majority share of assets under management (AUM) among the AO100,
with the combined assets of pension funds making up 52.8%, while
outsourced chief investment officers and master trusts are
responsible for the remaining 8.3% of total AUM in the AO100.
This marks a clear decline over the medium term.
Five years ago, pension funds made up more than 60% of the AO100,
while SWFs represented 32% (or less than one-third).
Taken as a whole, the AO100 are now responsible
for $23.4 trillion as of the end of 2022 — a decline of nearly 9%
compared with the previous year when this stood at $25.7 trillion
for the largest 100 asset owners at the time.
Other findings from the full study by the
Thinking Ahead Institute — which provides key insights and trends
on the top 100 asset owners in the world — include a growing
concentration of assets at the very top of the rankings across all
types of organizations and differences in investment
allocations.
The very largest 20 asset owners in the world
now have a total of $12.9 trillion alone, meaning the largest 20
represent 55.2% of the total AUM in the top 100. This concentration
at the top of the rankings is caused by a slower decline in asset
values among the largest asset owners in the preceding 12 months.
In fact, just the top five asset owners accounted for 24.4% of
total AUM in the study, with U$5.7 trillion.
The Government Pension Investment Fund of Japan
remains the largest asset owner in the world, with an AUM of $1.4
trillion alone. The top three also include the two largest
sovereign wealth funds. Norway’s Norges Bank Investment Management
comes second with AUM of $1.3 trillion, while China Investment
Corporation is third globally with $1.1 trillion.
North America accounts for 33.9% of total AUM in
the AO100 study, making it the largest region by asset value,
closely followed by Asia Pacific with 33.7% of total AUM. The
Europe, Middle East and Africa region represents 32.4% of total
AUM.
“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 Jessica Gao, director at the
Thinking Ahead Institute.
“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 owners in
different and unexpected ways.
“Despite this, we have seen some positive
outcomes from such unprecedented uncertainty. New risk
methodologies are emerging, from the old view of strategic asset
allocation toward leading funds adopting a total portfolio approach
(TPA) — where goals are the central driving force and best ideas
are incorporated through a competition for capital at the total
portfolio level. That has also allowed some large asset owners to
ride escalating market waves with better short- and medium-term
outcomes too. Meanwhile, we’ve also noticed a renewed emphasis on
positive culture, when markets put asset owners and their teams
under pressure,” said Gao.
The report also reveals the largest asset owners
have an emerging awareness and understanding of the significance of
artificial intelligence (AI) for the investment and decision-making
process. Out of the 20 largest global asset owners, nine
proactively reported a focus on this area of AI while 11 mentioned
a growing investment in technology more broadly to support
innovation.
“Globally significant asset owners are showing
greater awareness and planning for globally significant trends.
This has ranged, just in the past 12 months, from equally
existential questions of systemic risk — from climate to
geopolitics and technology. Such a breadth of threats and
opportunities will require a delicate juggling act as investment
organizations strive to balance their own internal investments,”
concluded Gao.
Notes to editors:
Figures were the latest available as at December 31, 2022.
About the Thinking Ahead
Institute
The Thinking Ahead Institute is a not-for-profit
research and innovation network motivated to influence the
investment industry for the good of savers worldwide and to
mobilize capital for a sustainable future. Since its establishment
in 2015, almost 90 investment organizations have collaborated to
bring this vision to light through designing fit-for-purpose
investment strategies, working toward better organizational
effectiveness and strengthening stakeholder legitimacy.
About WTW Investments
WTW’s Investments is an investment advisory and
asset management firm focused on creating financial value for
institutional investors through its expertise in risk assessment,
strategic asset allocation, fiduciary management and investment
manager selection. It has over 900 colleagues worldwide, more than
1,000 investment clients globally, assets under advisory of over
$4.7 trillion and $187 billion of assets under management.
About WTW
WTW (NASDAQ: WTW) provides data-driven,
insight-led solutions in the areas of people, risk and capital.
Leveraging the global view and local expertise of our colleagues
serving 140 countries and markets, we help organizations sharpen
their strategy, enhance organizational resilience, motivate their
workforce and maximize performance. Working shoulder to shoulder
with our clients, we uncover opportunities for sustainable
success—and provide perspective that moves you.
Learn more at wtwco.com.
Media contacts
Ed Emerman: +1 609 240 2766eemerman@eaglepr.com
Ileana Feoli: +1 212 309 5504ileana.feoli@wtwco.com
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