U.S. endowments and foundations returned a median 4.3% in the third quarter, narrowly outpacing a median 4.2% return recorded by public pension plans and a median 3.9% gained by corporate pension plans, according to Mercer Investment Consulting. Year-to-date through Sept. 30, public pension plans earned an average 6.1% on their investments, compared with an average 5.5% for endowments and foundations and 5.1% for corporate plans.
The median growth equity manager outpaced the median value equity manager by 40 basis points in the third quarter, while small-cap managers outpaced their large-cap counterparts by 180 basis points, according to Mercer. The median small-cap manager gained 5.9% in the third quarter, vs. 4.1% for the median large-cap manager.
The median core bond manager outperformed the Lehman Brothers Aggregate index by 20 basis points in the third quarter, while the median core opportunistic managers outperformed the same index by 40 basis points.
Based on an annual survey of investment managers, Mercer forecast that large-cap equities would return 7.3% for the full year and that core fixed income would return 2.7%. As measured by the S&P 500, large-cap stocks are up just 2.8% through the third quarter, while the Lehman Aggregate was up 1.8% for the period.
Fund universe information for the Mercer report was provided by Mellon Financial, while investment manager universes are derived from Mercer's proprietary database.