Assets of the world's largest 300 retirement funds increased by 9.8% in 2012, eclipsing the 1.9% growth rate from the previous year, according to an annual survey conducted by Pensions & Investments and Towers Watson & Co.
The latest growth marked the fourth consecutive positive year for the top 300 funds as they continued on an upward trajectory from the depths of the global financial crisis. Aggregate assets totaled $14 trillion, or about 47% of the total global pension assets estimated by Towers Watson.
“It was a year in which taking risk paid off,” said Carl Hess, global head of investments at Towers Watson, New York. “Global (developed markets) equities were up about 16%, and bonds also performed well, if not necessarily spectacularly. Returns in 2012 were very nice no matter where you were. What's not to love?”
Although investors faced a series of economic threats during the year, they didn't materialize. For example, equity markets continued to climb despite fears surrounding a possible collapse of the euro and the impact of the fiscal cliff in the U.S. Out of 12 funds in the top 20 that published annual reports online, eight had stressed volatility and uncertainty in global markets. Low interest-rate levels were also often cited as a major source of concern.
“As we are entering (the second half of) 2013, those problems have not really gone away,” Mr. Hess added. “It does leave us a little more precariously positioned.”