Institutional Investors End 2008 on a Negative Note

February 23, 2009 ( - The median corporate, public and foundation/endowment plan experienced negative investment results for the fourth quarter of 2008 and for the year, according to a quarterly survey of plan sponsor performance by Mercer.

Mercer’s Summary Performance of US Institutional Portfolios survey found the median corporate plan had a fourth-quarter loss of 12.6%. Public plans and foundation/ endowment funds lost 14% and 13.7%, respectively, according to a Mercer news release.

On a one-year basis, corporate plans had losses of 25.7%, while public plans and foundation/endowment plans lost 26.8% and 25.9%, respectively, the news release said. Over a 10-year time frame, all three plan types have averaged between 3.4% and 3.9% on an annualized basis.

According to Mercer’s analysis, the median large cap value manager outperformed its growth-oriented counterparts by 120 basis points during the period. The median core large cap manager outperformed the S&P 500 Index during the fourth quarter by 10 basis points and outperformed the index by 180 basis points on an annualized basis over the last 10 years.

The median core large cap manager outperformed its small cap counterpart by 400 basis points during the fourth quarter. The median core large cap manager lost 21.8% while the median core small cap manager lost 25.8%.

The international equity asset class, as represented by the MSCI EAFE Index, lost 20%, outperforming the S&P 500 Index, its US large cap counterpart, for the quarter by a margin of 190 basis points. However, international equity underperformed U.S. equity on a one-year basis by 640 basis points. Local regional stock market returns were negative for all regions.

Within the international asset class, the median value manager outperformed its growth counterpart by 260 basis points during the quarter, Mercer said.

Within the real estate asset class, the median global REIT manager lost 30.6% but outperformed the FTSE EPRA/NAREIT Global Index by 180 basis points. During the quarter the median US REIT manager lost 38.3%, slightly outperforming the FTSE US NAREIT index.

Within the fixed income asset class, the median core fixed income manager underperformed the Barclays Capital Aggregate Index in the fourth quarter by 170 basis points and on a one-year basis by 320 basis points. Over a 10-year period, the median core manager underperformed the index by 20 basis points.

The median core opportunistic manager underperformed the Barclays Capital Aggregate Index during the quarter by 460 basis points and by 860 basis points on a one-year basis. The median high-yield manager posted a loss of 15.3% for the quarter.

The median non-US and global managers had a quarterly gain of 6.8% and 4.3%, respectively.

A free summary Performance of US Institutional Portfolios may be downloaded from .