The total assets of the largest 1,000 U.S. retirement plans reached a record $10.326 trillion as of Sept. 30, up 10% from a year earlier, thanks in part to outstanding market returns, Pensions & Investments' annual survey found.
Assets of defined benefit plans among the P&I 1,000 rose 7.9% to $6.597 trillion while defined contribution plans rose 13.9% to $3.729 trillion.
Among the 200 largest retirement plans, assets totaled $7.452 trillion as of Sept. 30, up 9.7% from the previous year. DB plans in the top 200 reached $5.218 trillion, up 8% from a year earlier and DC plan assets totaled $2.234 trillion, up 13.9% from the year before.
Within the 10 largest, the Federal Thrift Savings Plan, Washington, broke through the $500 billion barrier. The giant defined contribution plan for federal employees reported $531.49 billion in assets as of Sept. 30, a gain of 9.5%.
TSP, which was created in 1986, is 57.8% larger than second place California Public Employees' Retirement System. The Thrift Savings Plan now accounts for 5.1% of the P&I 1,000 universe's total plan assets.
The average increase of the 200 largest retirement systems in the year ended Sept. 30 was 12%.
Strong public equity returns helped. As of Sept. 30, the MSCI Emerging Markets index returned 22.46%, the MSCI EAFE index returned 19.1% and the Russell 3000 index returned 18.71%.
Among the P&I 1,000 survey's findings, the continued popularity of passive investing was clear. Passive indexed equity assets of defined benefit funds among the 200 largest plans rose 18.2% to $926.2 billion, and passive indexed bonds rose 56.6% to $142.5 billion.
"We are seeing that over the last couple of years, the big push to passive obviously," said John Delaney, Philadelphia-based portfolio manager and senior investment consultant at Willis Towers Watson PLC. "Obviously, active management has a tough time keeping up with the bull market, when there's a kind of beta rally like we've seen it's kind of tough for active managers to keep up."
Added Russell Ivinjack, senior partner at Aon Hewitt Investment Consulting Inc. in Chicago: "I think the trend toward the additional assets invested in passive equities will continue. It has been harder to find alpha, particularly in the U.S. equity marketplace, (and) folks are fee sensitive. Those are two major trends there.
"But if you (take) a step back and look at the totality of their portfolios, while they're increasing their passive equities, with the additional assets to private markets, whether it's private equity, real estate (or) real assets, those increased allocations in that area, they're truly availing themselves of the most active management," Mr. Ivinjack said.