Positive market returns for all major asset classes helped boost assets for the 1,000 largest U.S. retirement plans to $9.39 trillion as of Sept. 30, up 6.2% from 12 months earlier, Pensions & Investments' annual survey found.
During the survey period, defined benefit plans in the top 1,000 saw assets rise 4.9% to an aggregate $6.12 trillion, while defined contribution assets rose 8.6% to $3.28 trillion.
Among the 200 largest retirement plans, assets totaled $6.79 trillion as of Sept. 30, up 6.2% from the year earlier. Of this, $4.83 trillion belonged to DB plans (up 5.5%) and $1.96 trillion to DC plans (up 8%).
The current survey showed a large gap between the number of corporate and public funds reporting double-digit asset growth. Twenty-five of the 100 corporations in the top 200 saw their assets grow by 10% or more, while only four of the 77 public plans did. (The remaining funds are union or miscellaneous plans.) Consultants cited the generally longer duration of corporate pension funds' fixed-income programs as the reason for that outperformance.
For the 12 months ended Sept. 30, the Bloomberg Barclays U.S. Long Government/Credit Bond index returned 14.66%, almost 10 percentage points above the Bloomberg Barclays U.S. Aggregate Bond index, which returned 5.19%.
“Public plans work under a different regulatory environment where essentially (they) are focused on total return in a portfolio,” said Sona Menon, Boston-based head of North American pensions at Cambridge Associates LLC. Public pension funds are more likely to invest in fixed income through core bonds, while corporate plans, which tend to follow a liability-driven investing approach, would hold more longer-duration bonds, she said.
Corporate funds in Callan Associates Inc.'s database returned a median 10.22% for the year ended Sept. 30, and public pension funds, a median 9.63%, said Jay V. Kloepfer, executive vice president and director of capital markets at Callan Associates Inc. in San Francisco.
While long-duration fixed income was a strong performer during the survey period, it was surpassed by the Russell 3000, up 14.96% for the 12 months ended Sept. 30.