OECD: Infrastructure Investing Low Among Largest Pensions


The world’s largest pension funds have significantly increased their allocations to alternative investments over the last four years. But allocations to infrastructure haven’t followed that upward trend, according to an OECD report.

Reported by Pensions & Investments:

Infrastructure investing activity remains low among the largest pension funds and public pension reserve funds worldwide, despite increased allocations to other alternative investments, a report from the Organization for Economic Co-operation and Development showed.


Average allocations to alternatives increased to 19.5% from 17.6% between 2010 and 2013 among the 10 largest pension funds surveyed, while infrastructure allocations were more stable. Of the 71 funds that responded to the OECD survey, unlisted equity and debt infrastructure investments totaled $80 billion, or 1% of total respondent assets, at the end of 2013, up slightly from $72.1 billion, or 0.9% of total respondent assets, at the end of 2012.

Mr. Paula and Raffaele Della Croce, lead manager on the OECD’s long-term investment project and co-author of the report, attributed the slow uptake to unstable regulatory frameworks and a lack of bankable projects.

“Pressure is on the policy side to provide the right conditions for investors to accept infrastructure,” Mr. Della Croce said in a telephone interview.

Although infrastructure investment activity remains low, plan executives are expressing interest in the asset category.

Large pension funds like the €20 billion ($24.5 billion) Etablissement de Retraite Additionnelle de la Fonction Publique, Paris, and $28 billion Afore Banamex, Mexico City, plan to establish new target allocations to infrastructure, according to the report.

Read the full OECD report here.

Growth Slower, But Still Steady For World’s Largest Funds in 2013


The annual pension fund survey from Pensions & Investments and Towers Watson contains news for both optimists and pessimists.

Glass half-empty: The world’s largest pension funds saw less growth in 2013 than they did in 2012.

Glass half-full: 2013 still marks the 5th consecutive year of positive growth for those funds.

All the details from Pensions & Investments:

Assets of the world’s largest 300 retirement funds increased 6.2% in 2013, growing at a slower pace compared with 2012’s 9.8% rate, according to an annual survey conducted by Pensions & Investment sand Towers Watson & Co.

That is the fifth year in a row of positive growth for the top 300 funds across the globe, with aggregate assets in defined benefit and defined contribution plans at $14.86 trillion. These funds represent 46.5% of global pension assets, according to Towers Watson’s most recent Global Pension Asset Study, declining slightly from 47% in 2012.

“Some funds are experiencing strong net inflows, some are experiencing increasing returns due to buoyant stock markets — that is true of Australia, Canada, the U.S. and the U.K.,” said Gordon Clark, professor and director of the Smith School of Enterprise and the Environment at the University of Oxford, Oxford, England.

“Indeed, we are in the midst of what some people think is maybe a nascent bubble in the stock markets, promoted by, in part, quantitative easing.”

Amid stubbornly low interest rates and a poor year for emerging markets strategies, developed markets equities followed up a strong 2012 with an even stronger 2013.

The Russell 3000 index returned 33.55% over the year, compared with 16.4% in 2012, while the MSCI All-Country World ex-U.S. index gained 15.97% vs. 16.5% in 2012.

Read the full breakdown of the survey here.


Photo by Horia Varlan via Flickr CC