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Pension Funds

Public pension plans top quarterly, annual returns in Wilshire TUCS, InvestorForce universes

The overall median return of the Wilshire Trust Universe Comparison Service and MSCI's InvestorForce Plan Universe was 0.88% and 0.61%, respectively.

Wilshire TUCS plans improved on a median -0.47% return in the first quarter.

Public defined benefit plans posted the highest median quarterly return in Wilshire's universe at 1.34%; followed by Taft-Hartley health and welfare funds, 1.23%; foundations and endowments, 1.06%; Taft-Hartley DB plans, 0.72%; and corporate DB plans, 0.42%.

"Exposure to U.S. equities clearly helped fuel plan performance second quarter," said Jason Schwarz, president of Wilshire Analytics and Wilshire Funds Management, in a news release on the results. "The recent mix of positive economic indicators and generally strong earnings results has helped drive equity returns higher."

For the year ended June 30, the TUCS universe returned a median 7.5%. Public DB plans also posted the highest median return for the 12-month period at 8.55%, followed by Taft-Hartley DB plans, 7.96%; foundations and endowments, 7.71%; Taft-Hartley health and welfare funds, 5.98%; and corporate DB plans, 5.52%.

By asset class, the Wilshire 5000 Total Market index posted quarterly and one-year returns of 3.83% and 14.66%, respectively. The MSCI World ACWI ex-U.S., meanwhile, returned -2.61% and 7.28% over those periods, respectively, and the Wilshire Bond index, -0.25% and -0.59%.

All master trusts had a median allocation of 44.72% to U.S. equities and 26.49% to U.S. bonds. Public plans had a median 47.08% allocated to U.S. equities and 21.2% to U.S. bonds as of June 30, while foundations and endowments, 47.04% to U.S. equities and 23.46% to U.S. bonds; Taft-Hartley DB plans, 46.84% to U.S. equities and 24.43% to U.S. bonds; and corporate DB plans, 35.54% to U.S. equities and 36.6% to U.S. bonds.

Longer term, for the three, five and 10 years ended June 30, the TUCS universe returned a median annualized 6.44%, 7.6% and 6.69%, respectively. The median corporate pension plan lagged all of the long-term returns, while the mean public DB plan return exceeded in all time periods.

Meanwhile, the combined median plan return for MSCI's InvestorForce Plan Universes was 0.61%, net of fees, for the second quarter, and 6.9% for the one-year period ended June 30. Taft-Hartley plans led the defined benefit sub-universes over both the second quarter and one-year periods, with median returns of 1.13% and 7.71%, respectively. Public defined benefit plans outperformed corporate DB plans, with a median second-quarter return of 0.82%, and 7.6% for the year. Corporate DB plans recorded a median return of 0.08% over the second quarter and 5.8% over the past 12 months.

Endowments and foundations had a median return of 0.57% in the second quarter and 7.48% for the year.

The median equity allocation across the universe was 48.4%, while the median fixed-income allocation was 18.4%. Public defined benefit plans had a higher median equity allocation than their corporate counterparts, at 53.2% vs. 43.6%.

MSCI's InvestorForce Plan Universes include more than 2,300 plans representing more than $3 trillion in assets.

Wilshire TUCS includes more than 1,300 plans with more than $3.6 trillion in assets combined.