Plans in the Wilshire Trust Universe Comparison Service returned a median 3.19% in the third quarter, up from 1.89% in the second quarter.
The third quarter of 2016 marks the fourth consecutive quarter of positive returns for all plan types and the highest returning quarter since the second quarter of 2014, which posted a median 3.43% return.
However, the median plan type still underperformed the classic 60% equity/40% bonds portfolio, which returned 3.23% for the quarter. It is the fifth consecutive quarter in which the median plan type has underperformed the traditional 60/40 portfolio, noted Robert J. Waid, managing director at Wilshire Associates.
Boosted by generally higher allocations to alternatives, foundations and endowments returned 3.47% for the quarter, replacing corporate defined benefit plans as the top-performing plan type. Public DB plans had the second highest return at 3.38%, followed by corporate plans at 3.14%; Taft-Hartley DB plans, 3.17%; and Taft-Hartley health and welfare funds at 2.01%.
For the 12 months ended Sept. 30, public funds were the best-performing plan type with a median return of 9.81%, followed by corporate funds at 9.21%; Taft-Hartley DB plans, 9.19%; foundations and endowments, 8.66%; and Taft-Hartley health and welfare funds, 6.31%. The traditional 60/40 portfolio returned about 12.5% for the year.
The TUCS universe returned a median 9.17% for the year, and annualized returns of 5.72%, 9.02% and 5.67%, respectively, for the three, five, and 10 years ended Sept. 30.
Plan performance was boosted by “solid” returns for all major assets classes, said Wilshire in a news release. The Wilshire 5000 Total Market index returned 4.29% for the quarter and 15.35% for the year; the MSCI ACWI ex-U.S., 6.91% and 9.26%; and the Wilshire Bond index, 1.65% and 8.34%, respectively.
A higher exposure to public equities helped put the median public fund ahead of its peers for the year, and large corporate and public funds ahead of the traditional 60/40 portfolio for the quarter, Mr. Waid said.
Wilshire TUCS includes more than 1,200 plans with more than $3.6 trillion in assets.
