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The Northern Trust Universe reported minimal gains for U.S. institutional investment plans in Q3 2021, with a median return of just 0.2%. Volatile equity markets hit record highs but ended flat for the quarter. Foundations and Endowments had a median return of 0.9%, while Public Funds returned 0.4%, and Corporate ERISA pension plans saw no gain at 0.0%. The report highlighted that U.S. equity allocations make up 23.2% of ERISA plan assets, and the median exposure to U.S. fixed income for Public Funds stood at 21.0%.
Positive
Foundations and Endowments achieved a median return of 0.9%, outperforming Public Funds and Corporate ERISA plans.
Continued strong corporate earnings support market resilience.
Negative
Public Funds and Corporate ERISA plans posted low returns of 0.4% and 0.0%, respectively.
Overall institutional plan returns were overshadowed by market volatility.
CHICAGO--(BUSINESS WIRE)--
U.S. institutional plan sponsors saw minimal gains in the third quarter of 2021, according to the Northern Trust Universe. The median plan return for the third quarter of 2021 was 0.2%, as volatile equity markets hit record highs but ended flat for the July-to-September period.
The Northern Trust Universe tracks the performance of 380 large U.S. institutional investment plans, with a combined asset value of more than $1.4 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.
Foundations and Endowments produced a 0.9% median return in the quarter ending September 30, 2021, slightly ahead of Public Funds, with a median return of 0.4%, and Corporate ERISA pension plans at 0.0% for the third quarter.
“U.S. equity markets moved to record highs during the third quarter, however broad gains were erased by volatility in September,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “Overall, positive market returns were the result of the ongoing resilient economic recovery, continued support by the Federal Reserve, and strong corporate earnings.”
Domestic equity and fixed income receive the largest allocations across client portfolios for all market segments in the Northern Trust Universe. The Northern Trust U.S. equity program universe reported a -0.1% median gain in the third quarter, in line with broad stock market indexes. The Northern Trust U.S. fixed income program universe had a median return of 0.1% for the quarter, with high yield bonds gaining 0.9% or more for the period.
Corporate ERISA pensions have the largest allocations to U.S. fixed income, with 44.5% of plan assets allocated to the asset class for the median ERISA plan at the end of the third quarter. The U.S. equity allocation was 23.2% of the median ERISA plan assets. International equity median exposure was 5.9% in the third quarter.
Public Fund plans have the highest allocations to equity, with the median U.S. equity allocation at 32.2% at the end of the second quarter. International equity median exposure came to 15.2%. The median exposure to U.S. fixed income for Public Funds was 21.0%.
Foundation and Endowment plans had a median U.S. equity allocation of 21.2% in the third quarter. International equity median exposure was 8.2% and the median exposure to U.S. fixed income was 8.7%. In the F&E universe, private equity and hedge fund median allocations come in at 21.8% and 9.3% respectively as of quarter end.
Results of U.S. plan level universes as of September 30, 2021:
3rd Qtr
1 Yr
3 Yr
5 Yr
ERISA
0.0
%
13.0
%
11.1
%
9.6
%
Public Funds
0.4
%
20.8
%
10.1
%
10.2
%
Foundations & Endowments
0.9
%
25.3
%
11.6
%
11.2
%
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 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2021, Northern Trust had assets under custody/administration of US$15.8 trillion, and assets under management of US$1.5 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.
