Institutional Investors Have Negative Returns in Q2

August 6, 2012 ( - Negative returns from domestic and international equities may have caused U.S. institutional investment plan sponsors in the Northern Trust Universe to lose 1.5% at the median in the second quarter, according to Northern Trust.

By Jay Polansky | August 06, 2012
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However, positive returns in most quarters since 2009 have boosted longer-term performance, and the median plan in the Northern Trust Universe has a three-year return of more than 11%.  

In the second quarter, corporate Employee Retirement Income Security Act (ERISA) pension plans led all segments with a loss of -0.8% at the median, while public funds lost 1.7% and the foundations & endowments segment fell 2% at the median for the three months ending June 30.

"Asset allocation played a role in relative performance between the segments in the second quarter," said William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services (IRAS). "Corporate ERISA plans benefited from a higher allocation to fixed income, which was up modestly while equities were down across the board. Public fund performance suffered from a larger allocation to non-U.S. equity. Foundations and endowments lagged the other segments mostly due to a smaller allocation to fixed income, slightly negative results for hedge funds and the poor performance of U.S. equity."

The median U.S. Equity Program in the Northern Trust Universe was down 3.9% in the second quarter, after gaining 13% in the first quarter. International equities lost more, with the median program down 7% in the quarter. Fixed income programs had a positive return of 2.3% at the median, with most of that performance coming from U.S. programs. Hedge funds returned -0.7%.