Assets of the top 100 asset owners globally have returned to growth in 2023 after a fall of 8.7 per cent in 2022, according to new research by the Thinking Ahead Institute.
As a result of a marked 12.3 per cent year-on-year increase from 2022, recovering the losses from the previous year, the world’s largest 100 asset owners (the ‘AO100’) now hold a record USD26.3 trillion.
The full Asset Owner 100 study also reveals the evolving split between different types of asset owner. Sovereign Wealth Funds (SWFs) remain a dominant force among other types of asset owners, now managing 38.9 per cent of the assets among the AO100, or nearly two-fifths. In comparison, pension funds, while still forming the largest assets under management by fund type (51.2 per cent), saw the smallest growth rate, with assets held rising by 8.9 per cent from the previous year.
Pension funds have represented a declining proportion of the AO100 in North America and Europe, Middle East and Africa (EMEA) since 2017, falling in favour of Outsourced CIOs and SWFs’ accelerated growth. Across Europe, Middle East and Africa (EMEA) the pattern is more pronounced as SWFs now form 70 per cent of total assets in the region. In comparison, SWFs manage 43 per cent of assets in APAC, and 2 per cent in North America.
The Government Pension Investment Fund of Japan remains the largest single asset owner in the world, with an AUM of USD1.59 trillion alone. The top three also includes the two largest sovereign wealth funds. Norway’s Norges Bank Investment Management in second place with AUM of USD1.55 trillion while China Investment Corporation is now third globally with USD1.24 trillion.
EMEA is the largest region in the AO100 study, accounting for 34.3 per cent of total AUM, closely followed by Asia-Pacific with 33.0 per cent of total AUM. North America represents 32.7 per cent of total AUM.
Jessica Gao, director at the Thinking Ahead Institute, says: “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.
“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. During this period of volatility, leading asset owners strived to balance political influence and achieve positive sustainability impacts, while operating in macroeconomic environments of high uncertainty.
“Technology and more fundamental change – including to the global climate – are accelerating factors too. Traditional risk management relying heavily on historical data and linear models struggles to keep up with today’s complex, interconnected risks. A new approach will be required to understand and manage risks that arise from complex, systemic sources with limited historical precedent.”
