Northern Trust Universe Data: 2020 Closes Strong for Institutional Plan Sponsors, Boosted by Vaccine News

Rhea-AI Summary

According to the Northern Trust Universe, the institutional investment plans experienced a significant performance in 2020, with a median return of 12.5% for the year and 9.4% for the fourth quarter. Tracking the performance of 388 institutions with over $100 million in assets, the combined asset value reached approximately $1.4 trillion. Corporate ERISA pension plans recorded a 14.8% return for the year, while Foundations and Endowments yielded 11.9%. The fourth-quarter U.S. equity market rally was fueled by optimism surrounding COVID-19 vaccinations.

Positive

• Median return for institutional investment plans was 12.5% for 2020.
• Foundations and Endowments segment showed an 11.9% median return for the year.
• Corporate ERISA pension plans achieved a 14.8% median return for the year.
• Fourth quarter median plan return ranked as the second best over the past 10 years.

Negative

• Corporate ERISA plans reduced U.S. equity allocation by 7.5% over five years.
• Foundations and Endowments U.S. equity allocation also decreased by 7.5% compared to five years ago.

Institutional investment plans benefitted as 2020’s market rally remained strong through the close of the fourth quarter, according to the Northern Trust Universe. The median plan in the Northern Trust Universe finished with a 12.5% return for the year and a 9.4% return for the three months ending December 31, 2020.

The Northern Trust Universe tracks the performance of 388 institutions which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings and hold more than $100 million in assets. These institutions have a combined asset value of approximately $1.4 trillion.

Plans in the Foundations and Endowments segment produced a 9.7% median return in the fourth quarter and an 11.9% median return for the year while Public Funds saw a 9.5% median return for the quarter and a 10.9% median return for the year. Corporate ERISA pension plans finished the quarter with an 8.0% median return and the year with a 14.8% median return.

“The fourth-quarter median plan return ranked as the second best over the past 10 years, trailing only 2020’s second-quarter return,” said Mark Bovier, regional head of Investment Risk and Analytical Services at Northern Trust. “Equity markets produced positive returns while fixed income markets produced more modest returns. The fourth-quarter U.S. market rally in equity markets can be attributed to emerging optimism related to multiple promising COVID-19 vaccinations approved during the quarter.”

The Northern Trust U.S. equity program universe reported a 16.0% median return for the quarter while the Northern Trust non-U.S. equity universe returned 16.4% during the same period. The median U.S. fixed income program had a median return of 2.1% for the quarter.

Corporate ERISA plans had a median allocation to U.S. equity of 27.5% at the end of the quarter, down 7.5% from five years ago. The median U.S. fixed income allocation was 39.2% and the median international equity allocation was 8.7%.

The Public Funds plans’ median fourth-quarter allocation to U.S. equity was 33.9% and their allocation to international equity was 15.3%. The median exposure to U.S. fixed income for Public Funds was 24.5%. The median exposure to private equity, real estate and hedge funds was 6.9%, 5.3% and 0.6% respectively.

The Foundations & Endowments plans had a median U.S. equity allocation of 24.6% in the quarter, down 7.5% from the same quarter five years earlier. International equity median exposure was 10.5% and the median exposure to U.S. fixed income was 10.6%. In the F&E universe, private equity and hedge fund median allocations come in at 12.9% and 12.7% respectively as of quarter end.

Results of U.S. plan level universes as of December 31, 2020:
		4th Qtr		1 Yr		3 Yr		5 Yr
ERISA		8.0%		14.8%		9.4%		10.2%
Public Funds		9.5%		10.9%		8.1%		9.5%
Foundations & Endowments		9.7%		11.9%		8.2%		9.4%

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2020, Northern Trust had assets under custody/administration of US$14.5 trillion, and assets under management of US$1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.

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FAQ

What was the median return for institutional investment plans in 2020 according to NTRS?

The median return was 12.5% for the year.

How did Northern Trust's Foundations and Endowments perform in 2020?

Foundations and Endowments had an 11.9% median return for the year.

What was the fourth quarter return for Corporate ERISA pension plans reported by NTRS?

Corporate ERISA pension plans achieved an 8.0% return in the fourth quarter.

What factors contributed to the fourth-quarter U.S. market rally according to Northern Trust?

The rally was attributed to optimism surrounding approved COVID-19 vaccinations.