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The Actuary The magazine of the Institute & Faculty of Actuaries

Largest asset owners ‘too important to fail’ as wealth grows

The world’s largest asset owners are now “too important to fail” in managing the wealth and wellbeing of billions of people, the Thinking Ahead Institute has declared.


Growing wealth controlled by asset owners ©Shutterstock
Growing wealth controlled by asset owners ©Shutterstock

The not-for-profit found that the top 100 asset owners (AO100) have seen their wealth grow by 1.7% to $19trn (£15trn) since last year, with pension funds accounting for 59.1%.

Japan’s Government Pension Investment Fund is the largest asset owner with $1.4trn, while the top 20 biggest funds now represent 55.5% of AO100 assets, or $10.5trn.

The researchers also highlighted a number of self-declared ‘universal owners’ – large-scale, long-term, leadership-minded funds that own a slice of the whole world economy.

The Thinking Ahead Institute – owned by Willis Towers Watson – said that these funds must direct capital in a way that makes a significantly positive impact on issues like climate change.

“The 100 largest asset owners are responsible for over 35% of all global asset owner capital,” said Thinking Ahead Institute global head of content, Roger Urwin.

“During 2018 there were a number of sustainability initiatives by universal owner funds that involved ‘doing good while doing well’.

“This marks the start of a movement in which funds support societally-beneficial initiatives that are consistent with financially sound fiduciary principles."

The top five largest funds in the AO100 are shown below ($1,000,000s):

Source: Thinking Ahead Institute
Source: Thinking Ahead Institute

The findings show that the share of AO100 assets owned by pension funds has fallen by 1.7% since 2018, while sovereign wealth funds (SWF) have seen their share rise by 1.5% to 33.5%.

Outsourced chief investment officers and master trusts have seen their share increase by 0.2% to 7.4%.

Asia-Pacific countries hold 36.1% of the assets in the ranking, with Europe, the Middle East and Africa representing 32.3%, and North America accounting for 31.6%.

“Global best practice on sustainability for asset owners is on an upward trajectory, but it still has a long way to go,” said Marisa Hall, Thinking Ahead Institute director.

“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.”

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