Thinking Ahead Institute

Large asset owners will need to develop a new risk management approach amid increasingly fraught political and investment conditions, according to a new Thinking Ahead Institute study.

Global pension funds returned to growth mode in 2023 following sharp losses the previous year but participants will need to update investment models amid more complex systemic challenges, a new survey of the sector has found.

Against a backdrop of increasing market complexity, the models that have for decades underpinned the way investments are made are no longer as useful as they once were, and threats to the financial system still lurk in its plumbing.

Plenty of big institutional investors are finding that the total portfolio approach eats strategic asset allocation for breakfast. But as their organisations become more and more complex, shifting towards a new way of investing is getting harder.

Global pension funds are facing increasing political pressure to alter investment strategies, according to The Thinking Ahead Institute (TAI), with governments able to exert “considerable influence” on net zero policies and domestic investment.

Systemic risk is difficult for investors to grasp because it’s no big deal – until it is. And unless investors adopt a “vastly different” mindset about pricing, it’s going to get a lot worse.

Global pension assets fell sharply in 2022, but the “global polycrisis” that caused the chaos is unlikely to be a one-off, according to the Thinking Ahead Institute.

Much of the work Willis Towers Watson does for Australia’s largest allocators is now around investment governance. But the tyranny of distance means the local scene can be a bit of an “echo chamber”.

As the world’s top 100 asset managers grow to awesome size, they’re confronted by a “complex and uncertain” macro environment and need to prepare for the burgeoning systemic risks of climate change.

Australia’s superannuation system is leading the world in pensions, but the broader market is still missing opportunities on stewardship and technology. The Thinking Ahead Institute’s 2022 Global Pension Assets Study has named Australia the world’s number one pension market, with 20-year pension asset growth of 11.3 per cent per annum in US dollar terms. The…