According to a Northern Trust news release about its fourth-quarter and year-end data, the median plan posted a 25% loss for 2008, including a 13.1% loss in the fourth quarter. Foundation/Endowment funds gave up 13.7% for the final quarter and 25.4% for the year, while Public Funds lost 13.6% and 26.6% and Corporate funds gave back 12.9% and 26.6%, the announcement said.
“These results confirm that institutional
investors were not spared from the impact of the global
financial crisis in 2008, despite their efforts to
diversify beta sources in recent years,” said Paul
d’Ouville, global director of Investment Risk &
Analytical Services at Northern Trust, in the
announcement. “While U.S. equities were the primary
source of negative results, the markets provided few safe
havens, and last year’s extraordinary environment
could prompt a reassessment of risk models and investment
strategies by large institutional investors.”
Northern Trust performance data shows that investment managers hired by plan sponsors were in line with their benchmarks, and that allocations to private equity and fixed income contributed to plan returns.
Foundations & Endowments, for example, enjoyed a
relative advantage through larger allocations to private
equity, which returned -5.7% in 2008, compared to the U.S.
equity program return of -37.5% and the international
equity program return of -43.2% for the year. The
Foundations & Endowments plan had an 11% allocation to
private equity, while the median Corporate plan allocated
less than 1% to the asset class.
The Northern Trust Universe represents the performance results of more than 300 large institutional investment plans, with a combined asset value of approximately $600 billion, which subscribe to Northern Trust performance measurement services.
Source: Northern Trust