U.S. institutional investors in the Northern Trust universe had a median -9% return in the third quarter, the first loss following four straight quarters of positive performance.
The third-quarter losses were driven by weak equity returns, William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services, said in a Northern Trust news release.
The universe had a median 1.2% return for the quarter ended June 30.
Corporate ERISA plans had the strongest performance in the third quarter with a median loss of 7.5%. Foundations and endowments had a median loss of 9%.
Fixed-income investments returned 2.1% in the third quarter, while U.S. equities lost 16.2%, international equities lost nearly 20%. Real estate was up 0.6%, while private equity gained 3.2% and hedge funds lost 2.7% for the quarter.
Mr. Frieske noted that the third quarter is historically the lowest-performing quarter in the calendar year, with public funds showing an average median loss of 0.7% in the quarter over the last 15 years. That's compared to an average 5% gain in the fourth quarter, a gain of 0.8% in the first quarter and a 3.1% gain in the first quarter over the same time period.
“Even though the third quarter was challenging, institutional plan sponsors managed to keep pace with their assigned performance benchmarks,” Mr. Frieske said in the release. “The median plan sponsor return was four basis points better than its benchmark for the quarter, indicating that active management across asset classes helped these plans outperform the markets somewhat.”
The Northern Trust universe consists of about 300 institutional investment plans with combined assets of about $641.1 billion.
