U.S. pension plans, endowments and foundations in the Northern Trust universe had a median loss of 4.7% in the second quarter, ending following four consecutive quarters of positive performance for the universe.
Foundations and endowments returned a median -4.8% for the quarter, followed by -5% for corporate pension plans and -5.7% for public pension funds, according to a Northern Trust news release.
For the year ended June 30, corporate pension plans returned 14.8%, followed by public funds at 13.8% and foundations and endowments at 12.4%.
The quarterly drop was driven primarily by poor performance in equity markets, William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services, said in a telephone interview.
He noted that much of the movement in equities is driven by fear and skittishness, instead of market fundamentals.
“Government bonds were leading corporate bonds even though we have high federal deficits; that seems to be contrary to the laws of supply and demand,” he said. “It’s a hard environment for active managers to separate the wheat from the chaff.”
The Northern Trust Universe represents about 300 institutional investment plans, with combined assets of about $612 billion.