Institutional Investors Had a Good Third Quarter

November 23, 2009 ( - According to Mercer’s Summary Performance of US Institutional Portfolios, the median corporate plan had a third-quarter gain of 12.1%, while public plans and foundation/endowment funds gained 11.7% and 10.4% during the quarter, respectively.

On a one-year basis, corporate plans had gains of 2.1%, public plans gained 1%, but foundation/endowment plans lost 1.5%. Over a 10-year time frame, all three plan types have averaged between 4.6% and 4.8% on an annualized basis, according to a Mercer press release.

Mercer’s analysis indicates the median large cap value manager outperformed its growth-oriented counterparts by 240 basis points during the period. The median core large cap manager underperformed the S&P 500 Index during the third quarter by 30 basis points, but outperformed the index by 200 basis points on an annualized basis over the last 10 years. The median core large cap manager underperformed its small cap counterpart by 350 basis points over the current quarter. The median core large cap manager gained 15.3%, while the median core small cap manager gained 18.8%.

The international equity asset class, as represented by the MSCI EAFE Index, gained 19.5% for the quarter, outperforming the S&P 500 Index, its U.S. large cap counterpart, by a margin of 390 basis points, and outperforming on a one-year basis by 10.1%, the press release said. Local regional stock market returns were positive for all regions. Currency was a positive contributor as the dollar weakened versus most major currencies during the quarter. Within the international asset class, the median value manager outperformed its growth counterpart by 120 basis points.

Within the real estate asset class, the median global REIT manager gained 24.5% and underperformed the FTSE EPRA/NAREIT Global Index by 60 basis points. During the quarter the median US REIT manager gained 32.3% and underperformed the performance of the FTSE US NAREIT index by 1%.

Within the fixed income asset class, the median core fixed income manager outperformed the Barclays Capital Aggregate Index in the third quarter by 160 basis points and outperformed the index on a one-year basis by 240 basis points. Over a 10-year period, the median manager outperformed the index by 30 basis points.

The median core opportunistic manager outperformed the performance of the Barclays Capital Aggregate Index during the quarter by 290 basis points and outperformed the index by 330 basis points on a one-year basis. The median high-yield manager posted a gain of 11.8% for the quarter.

In assessing international fixed income performance, the median non-US and global manager had quarterly gains of 8.1% and 7.3%, respectively.

The full report may be downloaded from