Northern Trust Universe Data: Solid Gains for Institutional Plan Sponsors in Third Quarter of 2020

Rhea-AI Summary

In the third quarter of 2020, institutional investment plans reported positive median returns, according to the Northern Trust Universe. The median plan return was 5.1% from July 1 to September 30. Foundations and Endowments achieved a 5.9% return, surpassing Public Funds at 5.0% and Corporate ERISA pension plans at 4.4%. The U.S. equity median return was 8.3%, while U.S. fixed income yielded 1.4%. Notably, Corporate ERISA pensions allocated 38.8% of assets to fixed income. Northern Trust Corporation, listed as NTRS, oversees over $1.3 trillion in assets.

Positive

• Median plan return of 5.1% in Q3 2020.
• Foundations and Endowments outperformed with a 5.9% return.
• U.S. equity median gain of 8.3% for the quarter.

Negative

• Corporate ERISA pension plans posted a lower return of 4.4%.
• U.S. fixed income allocations increased, indicating a shift away from equities.

CHICAGO--(BUSINESS WIRE)--Institutional investment plans maintained positive returns in the third quarter of 2020 as global equity and bond markets posted strong gains, according to the Northern Trust Universe. Plan sponsors saw a median plan return of 5.1% from July 1 to September 30, 2020.

The Northern Trust Universe tracks the performance of 388 large U.S. institutional investment plans, with a combined asset value of more than $1.3 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

Plans in the Foundations and Endowments segment produced a 5.9% median return in the third quarter, outpacing Public Funds, with a median return of 5.0% for the quarter, and Corporate ERISA pension plans, which returned 4.4% at the median.

“U.S. markets continued to show signs of an economic recovery, mostly as a result of loose monetary policy by the Federal Reserve,” said Mark Bovier, regional head of Investment Risk and Analytical Services at Northern Trust. “Equity indices posted strong returns, particularly in August. While bond markets were relatively flat overall for the quarter, high-yield bonds performed well as investors showed a willingness to take on more risk.”

U.S. equity is a core allocation for most plans in the Northern Trust Universe, and the Northern Trust U.S. equity program universe reported a median gain of 8.3% in the third quarter. Another top allocation for most plans, U.S. fixed income, had a median return of 1.4% for the quarter.

Corporate ERISA pensions have the largest allocations to U.S. fixed income, with 38.8% of plan assets allocated to the asset class for the median ERISA plan at the end of the third quarter – a 2% increase from the prior quarter, resulting from investors reallocating assets from the U.S. equity asset class. The U.S. equity median allocation fell to 26.0% of the median ERISA plan assets, down 9% from five years ago. International equity median exposure was 7.5% in the third quarter.

Public Fund plans have the highest allocations to equity, with the median U.S. equity allocation at 30.4% at the end of the third quarter. International equity median exposure came to 15.8%. The median exposure to U.S. fixed income for Public Funds declined to 23.7% from the second quarter. Relative to other alternatives, private equity has the largest median allocation for Public Funds, with a 7.7% median allocation.

Foundation and Endowment plans had a median U.S. equity allocation of 21.9% in the third quarter, down almost 10% from five years prior. International equity median exposure was 8.5% and the median exposure to U.S. fixed income was 9.8%. In the F&E universe, private equity and hedge fund median allocations come in at 16.7% and 10.4% respectively as of quarter end.

Results of U.S. plan level universes as of September 30, 2020:
		3rd Qtr			1 Yr			3 Yr			5 Yr
ERISA		4.4	%		9.8	%		8.2	%		8.9	%
Public Funds		5.0	%		6.1	%		5.9	%		8.1	%
Foundations & Endowments		5.9	%		8.0	%		6.4	%		7.8	%

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 September 30, 2020, Northern Trust had assets under custody/administration of US $13.1 trillion, and assets under management of US $1.3 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.