Northern Trust Universe Data: Plan Sponsors Extend Quarterly Gain

Northern Trust Universe data today revealed the third quarter of 2016 marked the fourth consecutive quarterly gain for plan sponsors, with institutional asset owners gaining approximately 3.6 percent at the median. Strong equity returns, especially non-U.S. equities, helped nearly double the median gain from the previous quarter.

The Northern Trust Universe tracks the performance of approximately 300 large U.S. institutional investment plans, with a combined asset value of approximately $899 billion, which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.

Since 1998, the average third quarter median return has been -0.1 percent, placing this quarter significantly above average. Foundations & Endowments had the best median return in the third quarter with a gain of 3.7 percent. Public Funds netted 3.6 percent while Corporate ERISA plans were up 3.4 percent.

“The median return of the three plan types varied slightly, but the way each achieved its strong positive return was distinctive,” said Amy Garrigues, head of Investment Risk and Analytical Services in North America. “Foundations & Endowments had the smallest allocation to the weakest returning asset, fixed income, while Public Funds had the largest allocation to the best returning asset class, international equities. Corporate ERISA plans benefited from a larger exposure to non-core fixed income.”

Northern Trust’s findings generally showed:

• Non-U.S. equities returned 6.9 percent at the median, the highest return of the major asset classes, while U.S. equities returned 4.8 percent.
• Corporate ERISA plans were helped by a significant allocation to high yield, emerging market debt and longer duration investment grade bonds. Those bonds returned considerably more than traditional core bonds, generating approximately 100 basis points of fixed income program returns.
• Public Fund returns were boosted by a relatively large allocation (16 percent) to non-U.S. equity while Corporate ERISA plans and Foundations & Endowments had median allocations closer to 10 percent.
• Foundations & Endowment returns were helped by a smaller allocation (12.4 percent) to domestic fixed income. The median third-quarter return for fixed income was 1.4 percent, the weakest of the major asset classes.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 22 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2016, Northern Trust had assets under custody of US$6.7 trillion, and assets under management of US$946 billion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.

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