Best Back to Back Quarters Since 1997 for Institutions

October 26, 2009 ( - Institutional investors emerged from the third quarter with another solid round of gains, according to a new report.

Northern Trust says that U.S. institutional investment plan sponsors posted a second consecutive quarter of strong gains in the period ending September 30, 2009, with a median return of 10.9% for the quarter, according to data in the Northern Trust Universe.

During Q3, Corporate Pension Plans posted a median return of 12.7%, while Public Funds registered a median gain of 11.6%, and Foundations & Endowments gained 9.9%.   For the past 12 months, Corporate Plans and Public Funds had moved into positive territory with median returns of 2.5% and 0.2%, respectively, while Foundations & Endowments were still in the red, with a median loss of 1.9%.

The Northern Trust Universe saw a median return of 10.2% for the second quarter following six straight quarters of losses (see Institutional Investors Post Sixth Straight Quarter of Losses ). During Q2 Corporate ERISA Plans led the way, posting a median return of 12%, while Public Funds gained 11% and Foundations & Endowments returned 9.3%.

The quarterly results were the second best in the past decade for Corporate Plans and third best for Public Funds in that period.

Top Performing Categories

The top-performing asset categories during the third quarter were emerging market equities (21%), small-cap stocks (19%) and high yield debt (6%), according to indices used as benchmarks for plans in the Northern Trust Universe.  

“The last five quarters have been a tale of two extremes for institutional plan sponsors, reflecting the volatility of global markets,” said William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services, in announcing the findings.   “Since mid-2008, institutional investors have experienced two of their worst quarters and two of their best quarters, in terms of performance. In fact, the second and third quarters of 2009 are the best back-to-back quarters on record, according to our database, which has tracked institutional investment performance since 1997.”

The third-quarter returns for institutional investors, following a 10.2% gain in the second quarter, have improved longer-term numbers for plans tracked in the Northern Trust Universe. The three and five-year

returns are: 


  • Corporate Pension Plans -0.1%
  • Public Funds -0.7%
  • Foundations & Endowments -0.4%


  • Corporate Pension Plans 4.6%
  • Public Funds 4.3%
  • Foundations & Endowments 4.4%

The Northern Trust Universe represents the performance results of more than 300 large institutional investment plans, with a combined asset value of approximately $596 billion, which subscribe to Northern Trust performance measurement services.