According to ICC data covering 20,000 portfolios with an aggregate market value of $1.7 trillion, the median US equity portfolio and the median US bond portfolios gained 7.5% and 2.8% respectively in 2005. For the fourth quarter of 2005, the median US equity portfolio and the median US bond portfolio both registered positive gains of 2.1% and 0.6%, respectively.
The ICC announcement said that the master trusts’ showing got a boost from exposure to international equity markets. For the year ending December 2005, the median portfolio for developed markets was up a strong 15.3% while emerging markets surged by 33.2%. In the fourth quarter, the median developed market equity portfolio was ahead by 4.3% while the median equity portfolio for emerging markets advanced by 6.9%. In stark contrast, global bond portfolios within the ICC Universe declined by -3.8% in the full year 2005 and -0.9% in the fourth quarter.
For the twelve months ending December 2005, the median high yield portfolio in the ICC Universe returned 3.2% compared to the median core portfolio return of 2.7%. Short-term interest rates continued to climb in the fourth quarter while longer-dated maturities actually declined. Once again the domestic core fixed income portfolio continued to underperform the high yield median portfolio. For the fourth quarter, high yield domestic bonds experienced a 1.1% increase surpassing the median core fixed income portfolio by 50 bps.
For the full year, neither value nor growth dominated across all style ranges, but there is a full 640 bps difference between the best performing median Mid Cap Growth portfolio and the worst performing Large Cap Core median portfolio. Growth outperformed value across all market capitalization bands in the fourth quarter, with a 420 bps difference between the best and worst performing styles. All style classifications of domestic equity experienced positive returns in the fourth quarter, although Small Cap Value was barely in the positive range, 0.1%. The highest median portfolio gain for the quarter was Large Cap Growth with an increase of 4.3%.
Within the universe of master trusts, the returns of Public Funds, Corporate Pension Plans, Endowments/Foundations and Taft Hartley narrowed significantly in the fourth quarter. There were only 20 bps separating the highest and lowest median returns among the four sponsor types.