Australian superannuation funds have improved their global rankings while the total assets of the world’s largest 300 pension funds fell by over three per cent in 2015, according to a report.
The Willis Towers Watson report found total assets of the world’s largest 300 pension funds fell to US$14.8 trillion ($19.5 trillion). Australia had a compound growth rate of six per cent per annum in US dollar terms, while the growth was stronger in the local currency.
The research also found that the top 300 funds represented around 42 per cent of global assets.
Willis Towers Watson senior investment consultant, Paul Newfield, said: “The continuing tides of asset rises and falls, combined with ever increasing liabilities, bears testament to how difficult it has become for funds to meet their respective missions”.
“Investment governance, beliefs, mission clarity — these are the key areas for any fund and we believe those funds which exhibit best practice attributes here will sow the seeds of longer term success for all their stakeholders,” Newfield said.
The report said there were 16 Australian funds in the top 300 and accounted for 3.4 per cent of the top 300 pension fund assets.
Compared to their 2014 positions, 11 of the 16 funds improved their relative ranking, and on average across all 16 funds, Australian funds improved their ranking by three places in 2015.
The report found Hostplus (up 11), Sunsuper (up nine), and Cbus (up nine) were the most improved.
“Of the top 300 funds globally, 19 per cent of the assets and 33 per cent of the funds relate to corporate superannuation plans whereas in Australia only six per cent of the entrants and three per cent of the assets pertain to corporate funds,” the report said.
“This reflects the maturity of the system as corporate funds around the world outsource or streamline arrangements — an area where Australia has generally led.”
Newfield noted that in Australia, each fund’s approach to currency had been a contributing factor to its ranking.
“Another differentiator of leading funds is their ability to innovate or be an early adopter; critical in such a persistently low-growth environment. One area where investors have embraced this to their benefit is thinking innovatively about betas across all possible return drivers in their portfolios and balancing this with appropriate focus on capturing alpha,” he said.
“Globally, and very clearly in Australia, there continues to be a focus on investment fees and ensuring value for money from fund managers.”
