Institutional Plan Sponsors Saw Moderate Gains in Q110

April 23, 2010 ( - U.S. institutional plan sponsors reported moderate gains for the first quarter of 2010, with a median return of 3.5% for plans in the Northern Trust Universe.

Corporate Pension Plans had the highest median return in the first quarter at 3.7%, while Public Funds posted a 3.6% median return and Foundations & Endowments had a median return of 3.3%. In the 12 months ending March 31, Corporate Pension Plans had gained 35.5%, Public Funds were up 32.2%, and Foundations & Endowments returned 30.1%.  

William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services, noted in a press release the first quarter of 2010 marked a fourth consecutive quarter of positive gains after six straight quarters of negative returns from late 2007 to early 2009. 

Frieske said returns in the first quarter were driven by higher-risk segments of traditional asset classes. Small-cap stocks performed best among domestic equities, with the Russell 2000 Index up 8.9% for the quarter compared to 5.4% for the Standard & Poor’s 500 Index. In international equities, emerging markets led the way, while high yield bonds were the highest-returning segment of the fixed income market.   

The MSCI Emerging Markets Index gained 2.5% in the first quarter, compared to 0.9% for the MSCI EAFE Index for developed international markets. In fixed Income, the Barclays Capital U.S. Corporate High-Yield Bond Index gained 4.6% in the quarter, ahead of the 1.8% return for the Barclays Capital U.S. Aggregate Bond Index.  

The Northern Trust Universe Private Equity and Hedge Fund segments each returned about 3.5% in the first quarter, while the Real Estate segment had a positive median return for the first time since the second quarter of 2008.

Since the fourth quarter of 2008, five-year returns for plans in the Northern Trust Universe have improved by about 300 basis points. Corporate plans posted a 4.7% five-year return, while public plans and foundations and endowments each posted a 4.4% five-year return.

The Northern Trust Universe represents the performance of about 300 large institutional investment plans, with a combined asset value of approximately $637 billion, which subscribe to Northern Trust performance measurement services.