Corporate pension plans, for private-sector employees, were the best-performing segment, gaining approximately 5% at the median for the three months ending September 30, 2012. Public funds (pension plans for public employees) gained 4.7%, and the foundations and endowments segment (funds managed for philanthropic organizations, colleges and universities) rose 4.3%, according to Northern Trust Universe data.
Positive returns in the third quarter were driven by U.S. equities, which make up 30% or more of all assets in most institutional portfolios in the Northern Trust Universe. The median U.S. equity program in the Universe gained nearly 6.5% in the third quarter, after dropping 5% in the previous quarter. Other asset classes also performed well: The median international equity program returned 7.2%, and the median fixed-income program gained 2.9%. International bonds, especially those from emerging markets, outperformed other fixed-income segments but are a relatively small allocation in most plans.
In the one-year period ending September 30, corporate pension plans returned 18.3%, public funds returned 16.7%, and foundations and endowments returned 14%. The Northern Trust Universe tracks the performance of about 300 large U.S. institutional investment plans, with a combined asset value of approximately $748 billion, that subscribe to Northern Trust performance measurement services.