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OMFIF
An improving world economy boosted public pension fund, sovereign fund and central bank assets to $33.5tn at end-2016, according to Global Public Investor (GPI) published by OMFIF, the London- and Singapore-based think tank. The ranking table of 750 public institutions shows asset growth of 1.4% over 2015.
The increase is largely propelled by pension funds, with assets up $435bn, and sovereign funds, up $143bn. Central banks showed the biggest decline, down $103bn.
The publication highlights increased GPI interest in ‘green economy’ investments, though such holdings account for only a small proportion of the total. This year’s GPI asset allocation survey shows 38% of respondents plan to increase green bond investments and 35% plan to invest in renewables over the next 12-24 months. Investments in green equity, fixed income and alternative vehicles represent one way for public investors to achieve adequate returns while meeting low-carbon requirements. Yet green finance remains beset by challenges, including over bond issue standardisation.
Europe registered an increase in total GPI assets, led primarily by central banks, with regional AUM rising $197bn to $6.4tn. Ranked seventh in the GPI list, the Swiss National Bank accounted for a rise of $76bn, caused by intervention to hold down the Swiss franc and strong returns on equities, making up one-fifth of Swiss reserves.
Total official gold holdings rose by 377 tonnes, led by the central banks of Russia, China and Kazakhstan. Turkey, Venezuela and Azerbaijan saw the biggest declines. Total gold holdings are the highest since 1999.
Asia Pacific remains the largest region by AUM, with $12.7tn, 37.9% of the total. North America is the second, with $8.1tn (24%). Europe with $6.4tn IS third. Asia has the largest public investment institutions, with four in the top 10 – People’s Bank of China, Bank of Japan/Ministry of Finance, Japan’s Government Pension Investment Fund and China Investment Corporation. The PBoC remains the biggest GPI by assets, despite suffering the largest decline ($307bn).
The publication features the Gender Balance Index, a study of female representation in central banking. “I strongly welcome OMFIF’s decision to raise awareness of the role that women play in central banking,” writes Sadiq Khan, Mayor of London, in a GPI foreword.
