The market rebound following plummeting returns that marked the beginning of the COVID-19 pandemic in March led institutional asset owners in the Northern Trust universe to post a median gain of 10.6% in the second quarter, after returning -11.6% in the previous quarter, data released Tuesday showed.
Public defined benefit plans performed the best among plan types with a median return of 11.1% for the quarter ended June 30, followed by corporate plans at 10.6%, and foundations and endowments at 9.2%.
For the year ended June 30, corporate DB plans had the highest median return at 7.4%, followed by foundations and endowments at 2%, and public DB plans at 1.9%.
"Investors' willingness to take on additional risk propelled returns in the equity and corporate fixed-income sectors, bringing those markets close to their all-time highs by the end of the second quarter," said Mark Bovier, Northern Trusts' regional head of investment risk and analytical services, in a news release about the data.
"Institutional plans with higher allocations to those sectors benefited from the risk exposure, while alternative asset classes trailed in relative performance during the quarter," he said.
U.S. equity, the largest allocation in most plans in the Northern Trust universe, had a median return of 22% for the second quarter, the highest recorded since 2000. The median return for the first quarter for U.S. equity was -22.1%, which had been the lowest since the global financial crisis.
For the three and five years ended June 30, corporate pension plans in Northern Trust's universe returned an annualized 7.6% and 7.2%, respectively; foundations and endowments, 5.4% and 5.5%; and public pension funds, 5.4% and 5.9%.
The Northern Trust universe consists of over 320 large U.S. institutional plans with combined assets of more than $1 trillion.
