The world’s 100 largest asset owners are now responsible for $25.7trn, according to new research by the Thinking Ahead Institute.
The Asset Owner 100 – 2022report, in its fifth year, revealed that total assets among the largest organisations have grown by 9% as of end-2021, down from 16% growth over the previous year.
RogerUrwin, co-founder of the Thinking Ahead Institute, said:“These big asset owners control the world’s most influential capital and hold great responsibility and growing influence in relation to their beneficiaries, and to a widening group of stakeholders.”
Pension funds remain the single biggest group of asset owners in the global study, controlling 56% of total assets although this has fallen from 58% the previous year. By contrast, sovereign wealth funds have seen their share rise comfortably above one-third, to 37%, up from 35% the previous year.
The Government Pension Investment Fund of Japan remains the largest asset owner in the world ($1.7trn) followed by the two largest sovereign wealth funds: Norway’s Government Pension Fund Global (GPFG), which is managed byNorges Bank Investment Management ($1.4trn) and China Investment Corporation ($1.2trn).
IPE reported last month that GPFG has seen its total assetsincrease by half a trillion kroner in the latest quarter because of a weaker domestic currency and inflows from oil revenue.
The top 20 asset owners are responsible for $14.1trn, or the majority (55%) of the top 100. This level of concentration has persisted since its inception, although individual asset owners have moved within the ranking, the Institute disclosed.
“The research highlights that many of these asset owners act as universal owners – long-term, leadership minded holders of portfolios that are exposed to the entire market and economy – and have a distinctive opportunity to contribute to real-world systemic change by contributing to a Paris-aligned future, consistent with net zero emissions by 2050,” Urwin said.
Long-term investing
The report also zooms in on long-horizon investing. Uncertainty has been one of the dominant themes in the investment industry in 2022 from heightened geopolitical risk and increased volatility, requiring investors to work within a more disciplined framework. With the macro being complex and uncertain, long-horizon investing principles provide a crucial set of guardrails, the report said.
There has been a continued focus on sustainability. Large asset owners have become more prominent in integrating ESG in pursuit of improved long-term sustainable returns, with some asset owners stepping up and moving beyond the impact of ESG risks on the portfolio to consider the impact of the portfolio and the assets on the world, it added.
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As an expert in finance, asset management, and investment strategies, I can confidently analyze and provide insights into the key concepts presented in the article about the world's largest asset owners. My in-depth knowledge of financial markets and investment trends allows me to shed light on the implications and trends discussed in the report by the Thinking Ahead Institute.
The article begins by highlighting a significant milestone: the world's 100 largest asset owners are collectively responsible for managing a staggering $25.7 trillion in assets, as revealed by the Asset Owner 100 – 2022 report. Drawing on my expertise, I recognize the importance of such research and its implications for global financial markets.
The 9% growth in total assets among these organizations as of the end of 2021, compared to the previous year's 16% growth, indicates a noteworthy trend. This information prompts a deeper analysis into the factors influencing this shift and the potential economic consequences.
The commentary by Roger Urwin, co-founder of the Thinking Ahead Institute, emphasizes the pivotal role played by these major asset owners. Their control over influential capital not only affects their beneficiaries but also extends to a broader group of stakeholders. This insight underscores the growing responsibility and influence wielded by these entities in the global financial landscape.
The report delves into the composition of the largest asset owners, revealing that pension funds continue to dominate, comprising 56% of total assets. However, the decline from the previous year's 58% suggests a dynamic landscape. Sovereign wealth funds, on the other hand, have seen their share rise to 37%, indicating a shift in the distribution of financial power.
Key players in this landscape include the Government Pension Investment Fund of Japan, retaining its position as the world's largest asset owner with $1.7 trillion in assets. Notable sovereign wealth funds, such as Norway's Government Pension Fund Global and China Investment Corporation, also hold substantial positions in the ranking.
The concentration of assets among the top 20 asset owners, responsible for $14.1 trillion or 55% of the top 100, is a consistent trend. While individual rankings may change, this concentration suggests a significant influence held by a select few entities in the global financial ecosystem.
The article also highlights the long-horizon investing approach in the face of heightened geopolitical risks and increased volatility in 2022. Long-term investing principles are presented as crucial guardrails in navigating the complex and uncertain macroeconomic environment.
Sustainability emerges as a prominent theme, with large asset owners increasingly integrating environmental, social, and governance (ESG) factors into their investment strategies. The shift from merely considering the impact of ESG risks on portfolios to evaluating the broader impact of portfolios and assets on the world underscores a growing awareness of the role these entities play in promoting sustainable and responsible investment practices.
In conclusion, this report provides valuable insights into the evolving landscape of global asset ownership, emphasizing the responsibility and influence of major players. The concentration of assets, the shift in the dominance of pension funds, and the focus on long-term, sustainable investing all contribute to a comprehensive understanding of the current state of the financial markets.
