U.S. defined benefit pension plans in the Northern Trust universe had a 4.5% median return in the fourth quarter.
Corporate plans returned a median 5.6%; public funds, 5.4%; and foundations and endowments, 4.2%, according to a news release from Northern Trust.
For the year ended Dec. 31, U.S. DB plans returned a median 0.8%, again led by corporate plans at 2.3% and followed by public plans at 0.9% and foundations and endowments at 0.6%.
Different asset allocations among corporate plans, public plans, foundations and endowments were the main driver for returns in the fourth quarter as there were not dramatic shifts in portfolio structures throughout the three sectors of Northern Trust's universe, said Jeff Feeney, senior vice president and regional head of the investment risk and analytical services team of North America.
“It really boils down to that asset allocation” Mr. Feeney said. “It has always been the central difference in the universes we have.”
Corporate pension plan returns were helped by their allocations to fixed income and domestic equity in the third quarter, at a median 35% and 37%, respectively. Public funds suffered from a larger allocation to international equity at a median 16%, while foundations and endowments had a median 7% allocation to hedge funds, which dragged on their performance.
For the quarter, the median U.S. equity portfolio returned 12%; international equities, about 4%; and fixed income and real estate, 2% each. Private equity was down a median 1.6% and hedge funds were down 0.4%.
The Northern Trust universe consists of about 300 large institutional plans with a combined asset value of about $689 billion.
