Mercer: Institutional Players In the Black for Q405

February 16, 2005 ( - Institutional investors mostly finished in the black during the fourth quarter of 2005, despite somewhat lackluster performances.

The regular survey by Mercer Investment Consulting showed that the median corporate plan had a fourth-quarter gain of 2.2%. Public plans and foundation/endowment funds did somewhat better, both advancing an average of 2.4%.

Over the year, corporate plans had average gains of 7.6% while public plans and foundation/endowment plans posted somewhat better performances, with average gains of 8.3% and 8.4%, respectively, Mercer IC said. Over a 10-year time frame, all three plan types have averaged between 8.9% and 9.6% on an annualized basis.

In the equity arena, Mercer IC said both value and growth managers produced positive fourth quarter results with the median large cap growth manager outperforming its value-oriented counterparts by 150 basis points.. The small cap asset class, as represented by the Russell 2000, posted an annual return of 4.6%, according to the Mercer IC data.

The median large cap manager outperformed the S&P 500 Index for the fourth quarter by 20 basis points, and outperformed the index by 150 basis points on an annualized basis over the last 10 years. Small cap managers underperformed their large cap counterparts by 100 basis points over the current quarter. The median small cap manager gained 1.3% while the median large cap manager was ahead 2.3%.

Looking at the international equity asset class, as represented by the MSCI EAFE Index, Mercer said it gained 4.1%, besting its US large cap counterpart for the quarter by a margin of 200 basis points, and on a year-to-date basis by 910 basis points. Currency gains continued to detract from non-US securities during the fourth quarter of 2005 as the dollar strengthened against most foreign currencies.

Within the international asset class, the growth style benchmark underperformed value by 80 basis points, yet the median growth manager outperformed their value counterparts by 100 basis points. International equities posted an annual return of 14%, Mercer IC said. In fixed income, the median core fixed income manager outperformed the Lehman Brothers Aggregate Index in the fourth quarter by 10 basis points and on a year-to-date basis by 40 basis points. Over a 10-year period, the median manager has outperformed the index by 20 basis points. The core fixed income asset class returned 2.4% during 2005.

Core opportunistic managers outperformed the Lehman Brothers Aggregate Index by 10 basis points during the quarter and by 60 basis points on a year-to-date basis. The median high-yield manager was ahead by 1.2% for the quarter.

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