Northern Trust Universe Data: Reopening and Vaccination Progress Drives Strong Returns for U.S. Plan Sponsors in Q2 2021

Rhea-AI Summary

U.S. institutional plan sponsors achieved notable investment gains in Q2 2021, largely driven by strong equity market performance amid rising Covid-19 vaccination rates. The median return in the Northern Trust Universe was 6.0%, marking the fifth-best quarterly performance in a decade. Corporate ERISA plans led with a 6.2% return, while Public Funds lagged at 5.6%. Key drivers included federal infrastructure spending proposals and robust technology sector returns. The U.S. equity allocation for ERISA plans stood at 24.1%, with fixed income at 42.9%.

Positive

• Median return in the Northern Trust Universe was 6.0%, fifth-best in the last 10 years.
• Corporate ERISA pension plans achieved a median return of 6.2%.
• U.S. equity program universe reported a 7.8% median gain in Q2.
• Positive trends in international markets with the eurozone PMI at its highest since 2006.

Negative

• Public Funds' median return was the lowest at 5.6%.

U.S. institutional plan sponsors had strong investment gains in the second quarter of 2021 as a result of continued market momentum from the rollout of Covid-19 vaccinations. The median plan in the Northern Trust Universe returned 6.0% for the quarter, ranking the period as the fifth-best quarterly result over the last 10 years.

The Northern Trust Universe tracks the performance of 377 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.

Corporate ERISA pension plans returned 6.2% at the median, Foundations and Endowments produced a 6.0% median return and Public Funds had a median return of 5.6% in the three-month period ending June 30, 2021.

“U.S. equity market returns were driven by climbing U.S. Covid-19 vaccination rates, proposals for massive federal infrastructure spending, and strong returns across the technology sector,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “International market data was also encouraging. The Markit eurozone PMI rose to its highest level since 2006, and the European Commission approved an $800 billion Covid-19 recovery package which was well received by European markets. With these combined factors, the Northern Trust Universe saw one of its most impressive quarters within the last decade.”

U.S. equity is a core holding for most plans in the Northern Trust Universe, and the Northern Trust U.S. equity program universe reported a 7.8% median gain in the second quarter. Another top holding for most plans, U.S. fixed income, had a median return of 2.2% for the quarter.

The U.S. fixed income allocation was 42.9% of the median Corporate ERISA plan assets. ERISA plans’ allocation to U.S. equity was 24.1% and international equity median exposure was 6.1% in the second quarter.

Public Fund plans have the highest allocations to equity, with the median U.S. equity allocation at 34.0% 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 20.8%.

Foundation and Endowment plans had a median U.S. equity allocation of 22.9% in the second quarter, down by 4.4% from five years earlier. International equity median exposure was 9.2% and the median exposure to U.S. fixed income was 8.4%. In the F&E universe, private equity and hedge fund median allocations come in at 20.0% and 9.4% respectively as of quarter end.

Results of U.S. plan level universes as of June 30, 2021:
		2nd Qtr		1 Yr		3 Yr		5 Yr
ERISA		6.2%		18.0%		11.8%		10.4%
Public Funds		5.6%		26.4%		10.9%		10.9%
Foundations & Endowments		6.0%		30.5%		12.0%		11.7%

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 June 30, 2021, Northern Trust had assets under custody/administration of US$15.7 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 Steet, 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 U.S. institutional plans in Q2 2021?

The median return for U.S. institutional plans in Q2 2021 was 6.0%.

How did Corporate ERISA pension plans perform in Q2 2021?

Corporate ERISA pension plans achieved a median return of 6.2% in Q2 2021.

What factors contributed to the investment gains in Q2 2021 for Northern Trust?

Investment gains were driven by climbing vaccination rates, federal infrastructure proposals, and strong technology sector returns.

What was the median return for Public Funds in the Northern Trust Universe?

Public Funds had a median return of 5.6% in Q2 2021.

What percentage of assets were allocated to U.S. fixed income in ERISA plans?

U.S. fixed income accounted for 42.9% of the median Corporate ERISA plan assets.