The world's 300 largest pension funds reached 18 trillion dollars according to The World´s Largest Pension Funds published by Thinking Ahead Institute / Willis Towers Watson published on September 2 with information at the end of 2018.
Among the 300 largest pension funds are 4 of the 10 AFOREs in Mexico. These 4 add up to 128,579 million dollars and together they would occupy the 22nd place. The Government Pension Investment of Japan occupies the first place (since 2002) with 1,374,499 million dollars in assets under management. The United States has 141 funds among the top 300.
In order to see one more AFORE as Principal, PensiónISSSTE or Coppel who has more than 12,000 million dollars in assets under management respectively and are in the following three positions in size (places 5, 6 and 7 respectively in Mexico), they would have to approach to 14,777 million dollars in assets under management of Los Angeles Water & Power pension fund that occupies position 300.
The 4 Mexican AFOREs at least increased 15 places between 2017 and 2018 when comparing the new report with respect to the previous one that includes information at the end of 2017.
AFORE XXI Banorte, which is the largest in Mexico, is in the 102nd position with 41,133 million dollars in assets under management. Between 2017 and 2018, it advanced 16 places by increasing 3,300 million dollars, equivalent to a growth of 8.7%, so that it could be seen among the top 100 next year.
AFORE CitiBanamex, the second largest, is in position 138 with 33,143 million dollars in assets under management. It rose 19 places and grew at a rate of 9.0% between 2017 and 2018.
The growth of AFORE Profuturo GNP of 13.9%, closed the difference with respect to AFORE Sura who is in position 171 with 27,156 million dollars in assets under management while AFORE Profuturo GNP is in position 172 with only a difference of 9 million dollars, that maintaining this dynamism could overcome Sura at the end of this year.
The average compound annual growth rate (CAGR) was 10.88% in the last 5 years (2013-2018) for the Mexican market expressed in local currency, while this same data expressed in dollars was 2.24%.
It is interesting to note that the composition of the portfolio of the 300 largest pension funds has 44.5% in equity, 37.2% in bonds and 18.3% in alternative investments and cash on average. In the case of Mexico, the weighted average for the 10 AFOREs is below these percentages, representing 17.3% in equity (local and global) and in alternatives 8.8% according to CONSAR at the close of August. In the case of debt, the percentage is 73.9% (government, corporates and global bonds).
Column by Arturo Hanono
Arturo Hanono is an institutional asset manager in Mexico. He has more than 30 year's experience in the Asset Management world, of which 15 he spent as a private banker and in the last 18 years has been CIO in several Afores. He has a degree in Economics from Universidad Anáhuac (1983). For his professional thesis, he won first place in the National Stock Market Prize organized by the Mexican Stock Exchange in 1985.
You can find him at email@example.com