Mercer: 1Q06 Kind to Institutional Players

May 18, 2006 ( - The median corporate, public and foundation/endowment plan finished the first quarter of 2006 in the black, according to a quarterly survey of plan sponsor performance by Mercer Investment Consulting, Inc. (Mercer IC).

A Mercer IC news release reported that the median corporate plan bulled ahead in the January to March period by 4.5% while public plans and foundation/endowment funds gained 5% and 5.1%, respectively.

On a one-year basis, corporate plans had average gains of 13.9%, while public plans and foundation/endowment plans both earned 15%. Over a 10-year time frame, all three plan types have averaged between 9.1% and 9.9% on an annualized basis, Mercer IC data showed.

According to Mercer IC’s analysis, both value and growth managers produced positive results during the first quarter, with the median large-cap value manager outperforming its growth-oriented counterparts by 160 basis points. Meanwhile, the median large-cap manager outperformed the S&P 500 Index for the first quarter by 20 basis points, and bested the index by 140 basis points on an annualized basis over the last 10 years. Small-cap managers outperformed their large-cap counterparts by 830 basis points over the first quarter of 2006.

The median small-cap manager gained 12.7% while the median large-cap manager gained 4.4%. The international equity asset class, as represented by the MSCI EAFE Index, was ahead 9.4%, outperforming its US large-cap counterpart for the quarter by a margin of 520 basis points and for the year by 1,270 basis points, the data showed.

Turning to the international asset class, the growth style benchmark underperformed value by 110 basis points, yet the median value and growth managers whose performance was analyzed by Mercer IC were only 20 basis points apart.

In the fixed income arena, the median core fixed income manager outperformed the Lehman Brothers Aggregate Index in the first quarter by 20 basis points and on a one-year basis by 40 basis points. Over a 10-year period, the median manager has pulled ahead of the index by 30 basis points.

Core opportunistic managers outperformed the Lehman Brothers Index by 30 basis points during the quarter and by 70 basis points on a one-year basis. The median high-yield manager posted a gain of 2.7% for the quarter.

In assessing international fixed income performance, the median non-US manager had a quarterly gain of 0.2% while the median global manager was flat. Over a 10-year period, the median managers in both universes outperformed their respective benchmarks, Mercer IC said.