Alternative Investments: Pensions Could be Holding $61 Trillion of Assets Globally By 2025

https://dailyalts.com/wp-content/uploads/2020/01/achievement-18134_640-pension-assets.jpg

Amidst a “crisis of unprecedented proportions,”  pension funds will try to push up returns by diversifying across geographies and asset classes.

A report from the Association of the Luxembourg Fund Industry said that pension funds are “facing a crisis of unprecedented proportions” due to rising life expectancies in many countries.

As a result, they have been forced to diversify across geographies and different asset classes in a bid to push up returns.

Nevertheless, global pension fund assets will likely grow from $ 42.2 trillion in 2018 to $ 61.1 trillion in 2025, reflecting a CAGR of 5.4%, the report said, according to Chief Investment Officer.

Equities lose ground to alternatives

Though equities still account for 38% of total pension assets as a end of 2018, they’re substantially down from the 60% they were in 1998. Equities’ loss has been alternative investments, says the report, due to the funds’ need for higher alpha.

“In light of the current global investment environment, pension funds, with their ability to weather periods of market instability, are also upping their allocations to alternatives, including notably illiquid assets such as private equity and infrastructure,” Oliver Weber, head of asset and wealth management, PwC Luxembourg, said in a statement.

Alternative assets comprised 27% of assets in 2018 up marginally from 26% in 2014. However, in absolute terms, alternatives have grown from $ 9.2 trillion to $ 11.6 trillion in that same period.

Sustainable investments too gain ground

Another interesting finding from the report is that investments by pension funds in sustainable assets grew by 34% in the two years to the end of 2018. The report said that investors were increasingly environmentally conscious and were looking for strong returns as well as a better impact.

Pension funds spread their wings

In the drive for return, pension funds have had to look outwards to foreign exposure. This move gives them access to “thriving markets” that help to increase returns and reduce portfolio volatility. Such investing also helps to counter local company and sector risks, the report said. Nevertheless, North America still accounts for the lion’s share – 61% – of their assets as at end 2018.

Related Story: Alternative Investments: CalPERS May Foray Into Private Debt

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2023/09/0deafbe2-9873-4d57-aaaf-ecb37a567e1a__IC21947.jpg
Digital Assets: 1% Of Chileans Sign Up For Worldcoin; Rush Seen In Argentina, Too
September 28, 2023     Digital Assets, News

Worldcoin, the innovative biometric wallet and ID project, is making significant waves in Chile as it surpasses a remarkable milestone. The organization has reported that over 200,000 Chileans have embraced…

https://dailyalts.com/wp-content/uploads/2023/09/1695822001308.jpg
FinTech: Atom Bank And Kamma To Partner For Greening UK Mortgage Assets
September 28, 2023     ESG and Sustainability, FinTech, News, Real Estate

Atom bank and Kamma have formed a significant partnership aimed at addressing the pressing concerns of climate change. This collaboration brings together Atom bank’s cutting-edge banking technology with Kamma’s climate…

https://dailyalts.com/wp-content/uploads/2023/09/0_onaeojfgCZeyNabT.jpg
Venture Capital: Slope, A B2B Solutions Provider Backed By Sam Altman, Scores $30M Funding

Slope, a two-year-old AI startup based in San Francisco, has secured a substantial $30 million equity round led by Union Square Ventures and featuring participation from OpenAI’s CEO, Sam Altman….

https://dailyalts.com/wp-content/uploads/2023/09/32215763362_b62ef08e5f_c.jpg
Artificial Intelligence: Palantir Awarded $250M Contract By US Department Of Defense For AI R&D
September 28, 2023     Artificial Intelligence, Latest News, News

Palantir Technologies Inc. (NYSE: PLTR) has secured a significant contract worth $250 million with the US Defense Department. The primary focus of this contract is the research and development of…