NEW YORK, November 25, 2024 — Assets of the top 100 asset owners globally returned to growth in 2023 after a fall of 8.7% in 2022, according to new research by leading global advisory, broking and solutions company WTW’s (NASDAQ: WTW) Thinking Ahead Institute.
As a result of a marked 12.3% year-on-year increase from 2022, recovering the losses from the previous year, the world’s largest 100 asset owners (the AO100) now hold a record US$26.3 trillion as of the end of 2023.
The full Asset Owner 100 study also reveals the evolving split between different types of asset owners. Sovereign wealth funds (SWFs) remain a dominant force among other types of asset owners, now managing 38.9% of the assets among the AO100, or nearly two-fifths. In comparison, pension funds, while still forming the largest assets under management by fund type (51.2%), saw the smallest growth rate, with assets held rising by 8.9% from the previous year.
Pension funds have represented a declining proportion of the AO100 in North America and in Europe, Middle East and Africa (EMEA) since 2017, falling in favor of outsourced chief investment officers and SWFs’ accelerated growth. Across EMEA, the pattern is more pronounced, as SWFs now form 70% of total assets in the region. In comparison, SWFs manage 43% of assets in Asia Pacific and 2% in North America.
The Government Pension Investment Fund of Japan remains the largest single asset owner in the world, with assets under management (AuM) of US$1.59 trillion alone. The top three globally also include the two largest sovereign wealth funds: Norway’s Norges Bank Investment Management in second place with AuM of US$1.55 trillion and China Investment Corporation now in third place with US$1.24 trillion.
EMEA is the largest region in the AO100 study, accounting for 34.3% of total AuM, closely followed by Asia Pacific with 33.0% of total AuM. North America represents 32.7% of total AuM.
“Asset owners globally are navigating a series of waves and occasional storms — from market volatility and geopolitics to technology and structural changes in societies and economies,” said Jessica Gao, director of the Thinking Ahead Institute.
“Macro trends matter. Over the past 12 months, the global investment macro environment has been marked by volatility and mixed performance across asset classes. Interest rates reached significant highs in 2023. The first half of 2024 brought some stabilization in global markets, as base rates remained relatively flat. After a sustained period of elevated rates aimed at controlling inflation, central banks began to implement gradual rate cuts in the latter half of 2024, marking the first reductions in years; however, market volatility remains high with uncertainty due to geopolitical events and several major elections.
“Meanwhile,” continued Gao, “the rise of political influence amid the increase in geopolitical risks, major elections and use of monetary policy to tackle inflation has necessitated asset owners to take a more sophisticated approach in managing the intersections between financial return and regulatory compliance. During this period of volatility, leading asset owners strived to balance political influence and achieve positive sustainability impacts with operating in macroeconomic environments of high uncertainty.
“Technology and more fundamental change — including to the global climate — are accelerating factors too. Traditional risk management relying heavily on historical data and linear models struggles to keep up with today’s complex, interconnected risks,” concludes Gao. “A new approach will be required to understand and manage risks that arise from complex, systemic sources with limited historical precedent.”
Figures are the latest available as of Dec. 31, 2023.
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to changing and improving the investment industry for the benefit of the end saver. It has over 55 members around the world and is an outgrowth of WTW Investments’ Thinking Ahead Group, which was set up in 2002.
WTW 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 US$4.7 trillion and US$187 billion of assets under management.
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