Institutional investors recorded negative returns for the quarter ended Sept. 30, ending a streak of three straight quarters of positive gains, data from Wilshire Advisors showed.
Plans in the Wilshire Trust Universe Comparison Service posted a median return of -2.4% for the quarter ended Sept. 30, well below the previous quarter's median of 2.7%.
"The strength of the U.S. economy in the face of materially higher interest rates has led to ongoing recalibration of interest rate expectations, fueling a continued rise in bond yields," said Jason Schwarz, president and deputy CEO of Wilshire Advisors, in a Nov. 9 news release. "All plan types outperformed a traditional 60/40 portfolio, while smaller plans with higher allocations to public markets generally underperformed larger plans by approximately 50-75 basis points."
According to Wilshire data, the traditional 60% stocks/40% bonds portfolio returned -3.3% for the three months ended Sept. 30.
By asset class, the Wilshire 5000 Total Market index returned -3.3% and 20.5% for the quarter and year ended Sept. 30, respectively. The MSCI ACWI ex-U.S. index posted respective quarterly and one-year returns of -3.8% and 20.4%. The Wilshire Bond index, meanwhile, returned a median -4% and 1.2% for quarter and year ended Sept. 30, respectively.
Across all plan types, large endowments and foundations (with more than $500 million in assets) had the least damaging median return for the quarter ended Sept. 30 at -1%, while large corporate pension plans (with more than $1 billion) had the lowest median return at -3.4%.
Despite the negative median returns that characterized the third quarter, positive returns in the fourth quarter of 2022 and the first two quarters of 2023 meant the trailing year ended Sept. 30 was well above positive territory at 10.2%.
For the year ended Sept. 30, small endowments and foundations (with assets below $500 million) had the highest median return at 12.5%, while large corporate pension plans had the lowest at 5.8%.