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How the world’s largest pension funds allocate their assets

North American pensions have the largest appetite for alternatives while their Asia-Pacific counterparts are the least enthusiastic, according to Willis Towers Watson.

Pension funds are, for private equity’s biggest players, among the most desirable limited partners due to the weight of capital they can put to work.

The world’s 300 largest pension funds had $18.1 trillion of assets between them at the end of last year, of which 42.3 percent was held by North American institutions, according to the Willis Towers Watson’s Thinking Ahead Institute World 300 2017. The US accounted for the largest number of funds by assets in the 300, followed by the UK, Canada and Australia.

The average pension portfolio of these heavyweights included a 21 percent allocation to alternative assets and cash, compared with 41 percent to equities and 37 percent to bonds. North American pensions had the largest appetite for alternatives and cash, with a 34.8 percent average allocation, while Asia-Pacific pensions were the least enthusiastic at 7 percent.

Asia-Pacific pensions could soon deploy more capital into alternatives, with their combined AUM climbing 20 percent to almost $5 trillion in 2017, outpacing the global 300’s 15.1 percent growth.