Largest asset owners pivotal for financial systems

The largest asset owners (AO), who currently account for US$19 trillion, are responsible for the wealth of billions of people and are key to aiding society’s biggest problems, The Thinking Ahead Institute found.

According to its global head of content, Roger Urwin, the 100 largest asset owners were responsible for over 35% of all global asset owner capital.

“Of these, there are a number of self-declared universal owners that are large-scale, long-term and leadership-minded funds that own a slice of the whole world economy,” he said.

Urwin stressed that because of their scale, the largest AOs play an important role in safeguarding the financial system and contributing positively to certain big societal issues such as climate change.

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Pension funds accounted for 59.1% of AO100 assets and represented a 1.7% drop compared to the previous year. Following this, 33.5% were held by sovereign wealth funds (SWF) increasing by 1.5% during the year and 7.4% by outsourced chief investment officers and master trusts, increasing by 0.2%.

At the same time, APAC remained the largest region in terms of AUM, accounting for 36.1% of assets in the ranking while EMEA and North American assets represented 32.3% and 31.6% respectively.

“Asset owners face lower expected returns in the future and the success with which they meet their targeted returns will be dependent on how well they adapt their investment model to integrate sustainability considerations such as ESG-related investment opportunities,” Jessica Melville, head of strategic advisory for Willis Towers Watson Australia, said.

“Global best practice on sustainability for asset owners is on an upward trajectory, but it still has a long way to go.”