Public sector assets saw a record $2.5 trillion surge in value last year

A global economic upswing helped the value of assets at central banks, sovereign funds and public pension funds hit $38.7 trillion in 2017, according to new research by London-based think tank OMFIF.

That was a 7 percent rise of $2.5 trillion, with public assets totaling $36.2 trillion in 2016. The organization said it was the largest jump it had seen in the five years it’s been tracking global markets.

Equities across different global indexes hit all-time highs in 2017. In the U.S. in particular, shares were supported by strong earnings, solid economic data and tax changes. The S&P 500, Dow and Nasdaq gained 19.4 percent, 25.1 percent and 28.2 percent, respectively, during the year.

“Assets were boosted by the continued global economic recovery, particularly across advanced economies,” the authors of the study said.

Between the three different institutions, pension funds recorded the highest asset increase, up by 8.1 percent on the year to $1.1 trillion. Central banks’ assets rose 7.8 percent and sovereign funds’ were up by 5.1 percent.

The study said the equity market rally in 2017 and the rise in gold prices supported asset valuations. The same study also showed that public assets rose across the world, apart from the Middle East. Weak commodity prices, political instability and currency pressures led to a $32 billion decline in Middle East central bank holdings.

However, in Europe the picture was different. The region saw the largest increase in public assets by 11.8 percent, boosted by central bank reserves.

“Central banks’ gold holdings increased by 371 tons over 2017, bringing total holdings to 31,800 tons, their highest level since the 1990s. Purchases were led by the Central Bank of Russia, whose holdings have overtaken those of the People’s Bank of China,” the research said.

The report covered 750 institutions across 174 countries.