The 1,000 largest U.S. retirement funds emerged from the year ended Sept. 30 with healthy coffers, despite a period marred by bouts of historic stock market losses and volatility.
During the year ended Sept. 30, retirement funds saw their assets grow 6.6% to $12.09 trillion, in comparison to the previous year when assets of the 1,000 largest funds grew by only 3%, results from Pensions & Investments' annual surveys show.
Over the five years ended Sept. 30, assets in this universe grew 36.7%, up from $8.84 trillion.
Jonathan Pliner, the New York-based U.S. head of delegated portfolio management at Willis Towers Watson PLC, noted that retirement funds having largely weathered historic lows in the stock market was "not entirely surprising … given the speed with which markets rebounded" in the second quarter of 2020 following the onset of the coronavirus pandemic.
"It really was the fastest recovery from a bear market," Mr. Pliner added.
"Given the speed of recovery and what the Fed attempted to do with rates, both sides of the portfolio did well," he said of fixed-income and risk assets. "Really, you saw across the board some positive returns for most plans."
Over the year ended Sept. 30, P&I's survey also found that defined contribution assets within the largest 1,000 funds continued to grow at a faster pace than defined benefit assets within these funds. DC assets in P&I's universe of the top 1,000 funds grew 9.2% to $4.67 trillion, while defined benefit plan assets grew 5% over the year to $7.42 trillion as of Sept. 30.
P&I's survey also found that large public plans continued to manage the lion's share of defined benefit assets in the top 200 funds.
As of Sept 30, public plans managed 68.6%, or $4.03 trillion, of the $5.88 trillion in DB assets across the top 200 funds. In comparison, 10 years earlier, this breakout was similar with public retirement plans managing 66.3%, or $2.45 trillion, of the $3.7 trillion in defined benefit assets in this universe.
Overall, assets in DB plans of the top 200 funds grew 5.1% to $5.88 trillion over the year ended Sept. 30, while assets in this universe grew 28.3% for the five-year period. Assets in DC plans of the top 200 funds grew 8.6% over the year to $2.81 trillion, while assets in this universe rose 55.1% over the five years.
Over the year, growth of assets in liability-driven investing stood out as the assets in defined benefit plans of the top 200 funds grew significantly, up 27.9% to $140.4 billion, and up 71.8% from $81.7 billion over the five-year period ended Sept. 30.