Top Aussie pension funds increase AUM by 9.1%

Australia now accounts for 3.5 per cent (seventh) of the top 300 pension funds in terms of assets under management (AUM), according Willis Towers Watson.

Willis Towers Watson’s latest global pensions study found Australian funds in the survey increased by 9.1 per cent over the year-end 2016, compared to 6.1 per cent for the top 300.

Out of the top 300, Australia accounted for 16 funds, of which 12 improved their ranking since 2015.

The most improved Australian funds by ranking were HOSTPLUS at 255 (up 27 places), REST at 125 (up 14), SunSuper at 140, and HESTA at 145 (both up 13 places).

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The world’s top 300 pension funds now represent 43.2 per cent of global pension assets, up from 42.5 per cent in 2015.

Willis Towers Watson in Australia, senior investment consultant, Alex O’Dea said: “The search for attractively priced assets at acceptable risk continues to be a driving force in shaping the fortunes of pension funds and their ability to meet respective missions and objectives”.

“This is increasingly hard and reduces the shine from a year in which, the largest asset owners have been able to achieve superior growth in this year’s figures,” he said.

“Central to this result has been the ability of leading asset owners to adapt to the ever-changing investment environment, through improvements in governance and the ability to learn from their peers.

“The desire of asset owners to implement best-practice and sound governance across their organisation has strengthened and will be a key factor in their future success.”

O’Dea noted that a central characteristic of leader funds had been their ability to innovate, rather than to rely on practices which may have worked in that past, whether that be through a more streamlined asset allocation, uses of factor strategies, and other smart betas, and better methods of accessing private markets.

“Increased interest in sustainability, both in integrated ESG [environmental, social, and governance] practices and stronger stewardship practice, is one further innovation that was notable in 2016,” he said.