The world's top 300 pension funds grew 7.5% in 1998, according to the annual survey by Pensions & Investments and InterSec Research Corp.
But that growth rate is less than half the level of 1997, when the top pension funds swelled 16%. In 1996, the world's largest funds grew 8.7%.
The assets of the top 300 pension funds totaled $5.204 trillion at year-end 1998, vs. $4.841 trillion a year earlier.
This is the 10th year P&I and Stamford, Conn.-based InterSec have published the survey. Since then, the leading pension funds, in aggregate, have almost tripled in size. In 1988, the world's largest 300 pension funds held $1.829 trillion in assets. Five years later, the assets totaled $3.266 trillion.
The group has a different leader this year. The Dutch government employees pension fund, Stichting Pensioenfonds ABP, Heerlen, reclaimed its position as the world's largest pension fund, which it had held in 1996. It leapfrogged over the U.S. giant California Public Employees' Retirement System, Sacramento, which slipped to second.
The funds ranking third through seventh mirror last year's. Japan's Association of Local Public Service Personnel, Tokyo, stayed in third place, followed by the New York State Common Retirement Fund, Albany; General Motors Corp., New York; the California State Teachers' Retirement Fund, Sacramento; and Sweden's Allmanna Pensionsfonden (Board 1, 2 & 3), Stockholm.
The Florida State Board of Administration, Tallahassee, however, rose one notch to No. 8, switching places with Japan's National Public Service Personnel, Tokyo (National Government Employees MAA). The New York State Teachers' Retirement System, Albany, retained its spot at No. 10.
But the periods of time over which the funds are compared make the list less than perfect. Pension funds outside the United States reported as of Dec. 31. U.S. funds reported their numbers as of Sept. 30, in the wake of global markets being rocked by Russia's default on its local bonds. That event, followed by the near collapse of hedge fund manager Long-Term Capital Management LP, sent markets plummeting in the third quarter of 1998.
U.S. pension funds continued to dominate the list of leaders, although they slipped by one, comprising 177 of the 300. U.S. funds' assets stand at $3.177 trillion vs. $3.029 trillion at year-end 1997.
The 4.8% increase in asset size is slight in comparison to the previous year's ballooning of almost 24%.
The U.S. funds' assets accounted for 61% of the total, down slightly from the 62.6% in 1997. Japan again was second with 9.8%, down from 10.2% a year earlier. The U.K. was third, growing to 9.5% from 9.4% a year earlier.
Dutch pension funds, ranking fourth, claimed the largest rate of growth of countries holding at least 1% of the world 300. The Netherlands holds 6.4% of the total, up from 5% in 1997.
Australian pension funds made significant gains and cracked the list of pension funds with at least 1% of the world 300. They claimed 1.1% of the top 300's assets, up from about 0.8% a year earlier.
Pension funds in the United States, United Kingdom, Netherlands and Australia are benefiting from their "virtuous economies," which have high growth rates, low inflation and subdued interest rates, said Philip Robinson, head of research, global asset study for Watson Wyatt Worldwide, Reigate, England.
If tracked over the calendar year, U.S. funds outperformed their European counterparts in the top 300. The median balanced return for funds in the United States was 15.2%; in the United Kingdom, 14.4%; in the Netherlands, 12.4%; and in Australia, 11.9%, according to Watson Wyatt.
The balanced returns of Japanese funds again saw a decline last year, falling to 0.5% from 2.3% a year earlier, according to Watson Wyatt.
Japan continued its economic malaise last year, Mr. Robinson said, accompanied by problems in its financial sector that resulted in several high-profile bankruptcies.
All Watson Wyatt calculations are in local currencies.
In 1998, the Standard & Poor's 500 stock index rose 28.6%, while the Morgan Stanley Capital International World Index rose 24.8%. The MSCI Europe Australasia Far East Index rose 20.3%.