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APAC pension funds fastest growing: Study

Sixteen of Australia's pension funds are among the world's largest, with the Asia Pacific region clocking the largest rate of growth last year despite COVID-19.

New research from the Thinking Ahead Institute and Pensions & Investments shows the assets under management of those world's top 300 pension funds grew by 11.5% to total US$21.7 trillion in 2020.

Again, 16 funds made the list with one new name - TelstraSuper - appearing in the top 300 for the first time.

The funds, by ranking, are AustralianSuper (22), Future Fund (25), Aware Super (39), QSuper (63), UniSuper (70), Sunsuper (81), Rest (110), Cbus (112), HESTA (116), Hostplus (132), Commonwealth Superannuation Corporation (135), State Super (151), ESSSuper (209), Super SA (212), GESB (214) and TelstraSuper (293).

All bar one of the funds moved up the rankings; Rest slid two places year on year after recording the lowest growth in AUM at 10%.

Aware Super saw the highest growth in AUM at 49%, largely because of its merger with VicSuper. As a result, it moved 22 places up the ranks.

On average, the Australian funds in the list grew by 15% in the year and ranked eight places higher compared to the previous year.

Commenting on the results, Willis Towers Watson senior director Martin Goss noted the significant change occurring in the Australian superannuation fund landscape.

"As this activity continues, we could see two or three Australian funds break into the top 20 funds in the ranking over the next five years," he said.

"And, consistent with this growth, we are seeing the largest funds adapt their investment and operating models to manage and take advantage of their increasing scale, with meaningful internalisation of investment management occurring at a number of funds as well as an increasingly global focus.

"The significance of these changes means the governance burden on fund boards is rapidly evolving, with new roles and responsibilities, and a different approach to oversight required."

North America remains the largest region by assets and number of funds, accounting for 41.7% of the total assets considered by the study. This is followed by Asia Pacific and Europe, both with 27.5%.

That said, Asia Pacific experienced the largest annualised growth rate at 9.9% over five years.

Overall, the top 300 funds have grown by 7.9% over the last five years.

The top 20, which AustralianSuper now sits just outside of, made up 41.8% of the total AUM for 2020.

The Government Pension Investment Fund of Japan remains the largest fund with over US$1.7 trillion; it's held this position for close to 20 years now. It is followed by the Government Pension Fund of Norway at US$1.3 trillion.

The Global Pension Asset Study (GPAS) is a Thinking Ahead Institute study which gathers yearly data on total assets, asset allocation, and plan structure for occupational pension plans in Australia, Brazil, Canada, Chile, China, Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, South Africa, South Korea, Spain, Switzerland, UK and US.

Read more: AustralianSuperAware SuperThinking Ahead InstituteSuper SATelstraSuperGovernment Pension Investment Fund of JapanCbusCommonwealth Superannuation CorporationESSSuperFuture FundGESBGovernment Pension Fund of NorwayHESTAHostplusMartin GossQSuperState SuperSunsuperUniSuperVicSuperWillis Towers Watson