Investing February 9, 2007

TUCS Data Shows 2006 a Red-Letter Year for Instl. Investors

February 9, 2007 (PLANSPONSOR.com) - 2006 was extremely kind to most institutional investors with an annual median return of 12.95%, according to new data.
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A news release reported that was the latest result for theTrust Universe Comparison Service (TUCS), a joint venture between Wilshire Analytics and custodial organizations.

Meanwhile, the median performance of all master trusts during the last quarter of 2006 was 5.50%. The median performance of corporate pension plans was 5.70% for the quarter and 13.36% for the year while public pension funds’ median performance was 5.57% for the quarter and 13.21% for the year.

According to the TUCS data, the fourth-quarter performance for foundations and endowments was 6.02% for the quarter and 14.09% for the year. Taft Hartley funds’ median performance was 4.55% of the quarter and 11.04% for the year. Finally, non-profits saw a median performance of 5.90% in the fourth quarter and 13.57% for the past four quarters.

The press release said the size of the master trust continues to have a noticeable impact on performance for the quarter, one-, three- and five-year periods. The one-year medians illustrate the superior performance of the large plans over the broader universes. The one-year median return for all master trusts was 12.95%, where the return for those plans with more than $1 billion was 14.34%.

Likewise, for public plans it was 13.21% versus14.34% and for corporate plans it was 13.36% and 14.15%. Endowments and foundations followed the trend with the large plans outperforming with a 14.83% return for the year, while the broader endowment and foundation universe median was up 14.09%.

“This persistent size effect can be explained by the differences in the allocation between the broader universe and the large plans,” said Hilarie Green, CFA, managing director of Wilshire Analytics’ Performance Reporting division, in the news release. “The large plans tend to be more diversified with a lower allocation to bonds and a higher allocation to real estate and alternative investments.”

TUCS reports the median rates of return and median asset allocation for the time periods ending in December. It includes more than 1,450 plans representing approximately $2.8 trillion in assets.

More information on the latest data is  here .

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