The returns for FY2009 and FY2010 represent the best back-to-back annual performance in the nine years that the Study has been conducted.
The average FY2010 return for Study participants’ defined benefit (DB) pension plans was 12.3% (net of fees). For the trailing three-year period, returns on DB plan assets averaged 0.2%, and for the trailing five years, 4.3%.
For the trailing three years, Study participants reported average annual returns on their investable assets of 0.4%, while for the trailing five years they reported average annual returns of 4.1%.
Relative to some other areas of the nonprofit sector, participating healthcare organizations realized moderately lower returns on their investable assets in FY2010. One hundred seventy-five independent and community foundations participating in the Commonfund Benchmarks Study Foundations Report posted an average return of 12.5% for FY2010. Sixty-nine operating charities participating in the Commonfund Benchmarks Study Operating Charities Report produced an average return of 11.6% for FY2010.
Viewing FY2010 returns by asset class, domestic equities provided the best return, an average of 17.8%. In descending order, other asset class returns were international equities, 12.8%; alternative strategies, 9.9%; fixed income, 7.8%; and short-term securities/cash, 1.1%.Within the larger alternative strategies category, the best returns came from distressed debt, 15.6%; commodities and managed futures, 15.4%; and energy and natural resources, 14.2%. Marketable alternative strategies—including hedge funds, absolute return, market neutral, long/short, 130/30, event-driven and derivatives—returned 7.4%.
At December 31, 2010, nonprofit health care organizations had 24% of investable assets and 32% of DB plan assets in domestic equities. Thirty-seven percent of investable assets and 29% of DB assets were in fixed income.
Organizations invested 15% of investable assets in international equities, with 19% of DB assets held in this asset type. Seventeen percent of investable assets and 16% of DB plan assets were invested in alternative strategies.
Participating healthcare organizations reported employing an average of 1.5 full-time equivalent (FTE) professionals to manage the investment function. This compares with an average of 1.4 FTEs reported in last year’s Study.
The average number of voting members on investment committees rose modestly to 8.1 from 7.9 in last year’s Study. The number of investment committee members who are investment professionals also rose, climbing to an average of 4 from 3.7 in FY2009.
The 90 participating organizations represented $102.6 billion in investable assets and $42.3 billion in defined benefit (DB) plan assets as of December 31, 2010. “Investable assets” include endowment/foundation funds, funded depreciation, working capital and other separately treated assets.More information is at http://www.commonfund.org.