The 20 biggest pension schemes globally, saw their assets under management (AUM) fall by 1.6 per cent in 2018 in the first negative result since 2012, according to the Thinking Ahead Institute.

The World 300 research also revealed that the AUM of the 300 largest funds in the world fell by 0.4 per cent, or $18trn, over the year. In 2017, assets increased by 15.1 per cent.

Among the top 300 funds, defined contribution assets increased by 5.1 per cent during 2018, while defined benefit assets declined by 0.2 per cent. DB funds’ share of AUM has remained unchanged at 64.7 per cent but has been decreasing across all regions except for Europe.

DB plans also dominate in Europe, North America and Asia-Pacific where they represent 53.7 per cent, 74.2 per cent and 65.1 per cent by assets respectively. DC plans dominate 70 per cent of assets elsewhere, particularly in Latin American countries.

Europe’s share of the top 300 assets has fallen to the lowest value in five years, to 24.9 per cent, with an annualised growth rate of 0.5 per cent. However, Denmark’s ATP re-entered the top 20 funds, having dropped out a year ago, replacing South Africa’s GEPF.

Thinking Ahead Group head of research, Bob Collie, said a tougher market environment in 2018 meant AUM growth paused, but that the underlying trend remains one of growing pension markets worldwide.

He said: “The pace of change in the investment world is a challenge, and scale is a huge advantage in a lot of ways. Many of the most interesting and important developments start with the largest funds, and as new investment ideas like the total portfolio approach and universal ownership gain traction in these organisations, they influence the whole market.

“It’s particularly notable that a majority of the largest funds are now highlighting the importance of sustainability. ESG factors are now significant financial considerations. Beyond that, there’s also an evolving recognition of the role large investors play within society, and the responsibility that comes with it.”

Over the year, 26 new funds entered the top 300 ranking. Germany saw 6 of its pension funds drop off the list. The US continues to have the largest number of funds in the list (141), followed by the UK (24), Canada (17), Australia (16) and Japan (15).

The top three ranked pension funds are Japan’s Government Pension Investment (1), Norway’s Government Pension Fund Global (2) and the US’ Federal Retirement Thrift (3). European funds in the top 20 list include Netherlands’ ABP (5) and PFZW (10) and Denmark’s ATP (20).

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