Top asset owners return to growth: Study

Assets of the top 100 asset owners globally returned to growth last year, with five Australian funds placed on the list and commanding 3% of the total assets.

The Asset Owner 100 study from the Thinking Ahead Institute shows the world's top 100 asset owners by size oversaw more than $40 trillion at 2023 end, up 12.3% on the previous year; total assets under management (AUM) dropped 8.7% in 2022.

Of the total assets, pension funds manage 51.2%, sovereign wealth funds have 38.9%, and outsourced CIOs and master trusts oversee 9.3%. Foundations and endowments account for 0.6%.

This has changed slightly over the years, with pension funds' dominance having diminished since 2017 when it commanded 60.8% of the total AUM. At the same time, sovereign wealth funds' AUM has grown, having risen from 32% in 2017.

The top 20 asset owners made up 55.6% of the total AUM, with $22.63 trillion. Of this, 24.4% belongs to the top five asset owners, being Japan's Government Pension Investment, Norges Bank Investment Management, China Investment Corporation, SAFE Investment Company, and the Abu Dhabi Investment Authority.

In total, five Australian asset owners made the list, home to 3% of the total AUM.

Between 2017 and 2023, AustralianSuper was the local asset owner to move the furthest up the ranks, jumping 21 places to 32^nd place. This was followed by Future Fund which rose six places to now rank 39^th.

Elsewhere, Australian Retirement Trust ranked 45^th, Aware Super came in at 70^th, and UniSuper ranked 96^th.

More broadly, Asia Pacific accounts for about one third of the total assets, coming in as the second-largest region in the study.

"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," Thinking Ahead Institute director Jessica Gao said.

"Macro trends matter. Over the last 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 stabilisation 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, 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."