GLOBAL - Total assets at the world's largest pension funds grew by 19% to US$6.6trn during 2003, according to research by global consulting firm Watson Wyatt.
Watson Wyatt said its Global 300 ranking revealed the year was characterised by rising equity markets and continued US dollar weakening with non US-based funds with significant equity allocations achieving the highest US dollar growth.
US funds’ overall market share fell almost 2% during the year to 56.6%.
Commenting on the findings, global head of investment consulting at Watson Wyatt, Roger Urwin (pictured), said: “The recent strengthening of equity markets has helped repair some of the massive damage pension funds around the world experienced from 2000 to early 2003.
“While stronger markets provided a welcome respite there remains more guarded optimism about future equity returns and as a result funds are now more inclined to consider diversifying their assets, mainly into bonds and alternatives.
“However, such strategic changes have not been commonplace during the past 12 months, as funds have not wished to lock in equity losses relative to their 2000 levels.”
The research found non-US funds had the strongest growth in US dollar terms, collectively posting an average of 22%, but when viewed in local currency terms the average dropped to 5%.
South Africa had the largest percentage gain in value of assets (in US dollar terms) with 86.1% followed by Brazil, 79% and Canada, 52%. The UK produced the lowest asset growth (in US dollar terms) at 7%.
The New York City Teachers fund was the best performer, in terms of asset growth, rising 327%, partly due to a change in reporting followed by South Africa’s Government Employees fund (136%) and the UK’s Bae Systems Pension Scheme (110.7%).
The top fund, ranked by total assets as at 31 December 2003, was Japan’s Government Pension Investment with US$418m with Netherlands fund ABP coming in second with US$188m. The California Public Employees fund was ranked third with US$148m.
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