Diversification No Help for Institutional Investors in Q3

The median performance for all plan types was -0.84% in Q3, as measured by Wilshire TUCS. “In a quarter where the Wilshire 5000 Total Market Index and Barclays U.S. Aggregate Index returns were up slightly at 0.08% and 0.17%, respectively, it is surprising to see that performance for all plan types was in the red,” says Robert J. Waid, managing director at Wilshire Associates.

According to Waid, small public funds with assets less than $1 billion were the lowest performing plan type (-1.07%), and large corporate funds with assets greater than $1 billion had the best performance for the second quarter in a row, at -0.54%.

“This is a quarter where classic diversification did not pay, with U.S. small-cap, international equity, real estate and commodities all underperforming. This explains why the median performance for all plan types underperformed the classic 60/40 portfolio,” he adds.

“Unlike last quarter, performance differences between plan types and sizes were small with foundations and endowments having the largest size spread of only 20 basis points, with the median performance for small and large foundations and endowments down -0.96% and -0.79%, respectively,” Waid says.

Wilshire TUCS, a cooperative effort between Wilshire Analytics, the investment technology unit of Wilshire Associates Incorporated, and custodial organizations, includes nearly 1,600 plans representing in excess of $3.7 trillion in assets.