Institutional asset owners in the Northern Trust universe returned a median 3% in the second quarter, marking the seventh consecutive quarter of investment gains but down from a median 4.2% return in the previous quarter, said data released Friday.
Corporate defined benefit plans posted the highest quarterly return among plan types at 3.6%, followed by public DB plans at 3.2%, and foundations and endowments at 2.9%.
For the 12 months ended June 30, public DB plans posted the highest return at 12.7%, followed by foundations at endowments, 12.5%, and corporate DB plans, 10.7%. The median one-year overall return for the universe was 12.3%.
For the three and five years ended June 30, corporate plans in Northern Trust's universe returned an annualized 5.6% and 8.9%, respectively; public funds, 5.5% and 9.1%; and foundations and endowments, 4.6% and 8.4%.
"All plan sponsor segments saw solid performance in the second quarter, and asset allocation played a different role for each type of plan," said Mark Bovier, North America regional head of investment risk and analytical services at Northern Trust, said in a news release on the results. "While corporate ERISA plans have large allocations to fixed income, they also allocate more than other segments to high yield, emerging market debt and longer duration investment-grade bonds, all of which returned noticeably more than traditional core bonds in the second quarter."
Mr. Bovier added: "What worked for public funds was a relatively large allocation to non-U.S. equities — 16% for the median plan, compared to approximately 11% for corporate ERISA and foundations & endowments. F&E plans were weighed down by relatively weak returns from alternatives."
For the three months ended June 30, plans in the Northern Trust universe posted a median international equity return of 6%, 3.3% for private equity and less than 2% for real estate. The median overall equity and fixed-income returns were 4.3% and less than 2%, respectively.
The Northern Trust universe consists of about 300 large U.S. institutional plans with combined assets of about $897 billion.