Increasingly strong gains by global equity markets led institutional asset owners in the Northern Trust universe to post a median gain of 9.4% in the fourth quarter, after returning 5.1% in the previous quarter, data released Tuesday showed.
For the year ended Dec. 31, the median plan in the universe returned 12.5%.
Foundations and endowments performed the best among plan types with a median return of 9.7% for the quarter ended Dec. 31, followed by public defined benefit plans at 9.5% and corporate DB plans at 8%.
Corporate pension plans had the highest median return at 14.8%, followed by foundations and endowments at 11.9% and public pension plans at 10.9%.
"The fourth-quarter median plan return ranked as the second best over the past 10 years, trailing only 2020's second-quarter return," said Mark Bovier, Northern Trust's regional head of investment risk and analytical services, in a news release. "Equity markets produced positive returns while fixed-income markets produced more modest returns. The fourth-quarter U.S. market rally in equity markets can be attributed to emerging optimism related to multiple promising COVID-19 vaccinations approved during the quarter."
Non-U.S. equity performed particularly strongly in the fourth quarter with a median return of 16.4%, while U.S. equity, the largest allocation in most plans in the Northern Trust universe, had a median return of 16% for the fourth quarter, while U.S. fixed income had a median return of 2.1%.
For the three and five years ended Dec. 31, corporate pension plans in Northern Trust's universe returned an annualized 9.4% and 10.2%, respectively; foundations and endowments, 8.2% and 9.4%; and public pension funds, 8.1% and 9.5%.
The Northern Trust universe consists of 388 large U.S. institutional funds with combined assets of more than $1.4 trillion.
