Strong gains by global equity and bond markets led institutional asset owners in the Northern Trust universe to post a median gain of 5.1% in the third quarter, after returning 10.6% in the previous quarter, data released Thursday showed.
Foundations and endowments performed the best among plan types with a median return of 5.9% for the quarter ended Sept. 30, followed by public defined benefit plans at 5% and corporate DB plans at 4.4%.
For the year ended Sept. 30, corporate pension plans had the highest median return at 9.8%, followed by foundations and endowments at 8% and public pension plans at 6.1%.
"U.S. markets continued to show signs of an economic recovery, mostly as a result of loose monetary policy by the Federal Reserve," said Mark Bovier, Northern Trust's regional head of investment risk and analytical services, in a news release. "Equity indices posted strong returns, particularly in August. While bond markets were relatively flat overall for the quarter, high-yield bonds performed well as investors showed a willingness to take on more risk."
U.S. equity, the largest allocation in most plans in the Northern Trust universe, had a median return of 8.3% for the third quarter, while U.S. fixed income had a median return of 1.4%.
For the three and five years ended June 30, corporate pension plans in Northern Trust's universe returned an annualized 8.2% and 8.9%, respectively; foundations and endowments, 6.4% and 7.8%; and public pension funds, 5.9% and 8.1%.
The Northern Trust universe consists of 388 large U.S. institutional funds with combined assets of more than $1.3 trillion.