Northern Trust Universe Data: Equities Drive First-Quarter Gains for Plan Sponsors

Institutional plan sponsors netted investment gains of 4.2 percent at the median in the first quarter of 2017, according to Northern Trust Universe data released today. It was the sixth consecutive three-month period of gains for institutional asset owners, with equities providing the bulk of positive performance in the quarter.

The Northern Trust Universe tracks the performance of approximately 300 large U.S. institutional investment plans, with a combined asset value of approximately $897 billion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

“Institutional asset owners continue to experience quarterly returns that are above long-term averages, supported by rising equity prices,” said Amy Garrigues, head of Investment Risk and Analytical Services at Northern Trust. “The 4.2 percent median return for this year’s first quarter compares to the average median quarterly return of about 2.8 percent since the end of the financial crisis in second quarter of 2009. Over 20 years, from 1996 through 2016, the average median quarterly return for asset owners was 1.8 percent.”

Since the end of the financial crisis, in March 2009, the median total equity program in the Northern Trust Universe has had an average annual return of 14.3 percent. In the first quarter, the median total equity program was up 6.7 percent, while the median international equity program gained more than 8 percent. Fixed income, private equity and real estate programs had gains of less than 2 percent each in the first quarter.

The Public Fund segment had the best median return in the first quarter of 2017, on a relative basis, gaining 4.3 percent. Close behind was the Foundations & Endowments segment, up 4.2 percent, while Corporate ERISA plans were up 4.1 percent.

Public Funds benefited from a relatively large allocation to equities, compared to the other plan types. Public Funds had a median allocation of almost 56 percent to equities as a whole while Corporate ERISA plans had an allocation of 45 percent and Foundations & Endowments had a median allocation closer to 44 percent.

For Foundations & Endowments, the driver of the positive quarter was a relatively small allocation to fixed income, which had the weakest returns of any asset class in the quarter. Allocations to fixed income were about 13.5 percent for F&E funds at the median, compared to 22 percent for Public Funds and 44.5 percent for Corporate ERISA plans. While Corporate ERISA plans had the largest allocation to fixed income, they also had the largest allocation to high yield, emerging market debt and longer duration investment grade bonds, all of which returned noticeably more than traditional core bonds.

Longer-term returns as of March 31, 2017 are as follows:

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 March 31, 2017, Northern Trust had assets under custody of US$7.1 trillion, and assets under management of US$1 trillion. 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.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/disclosures.

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