Equities Boost Performance for Master Trusts in Q214

The universe’s median plan was up 16.22% for the 12 months ending June 30. Median allocations by asset class continue to show institutions more invested in alternatives, real estate and other real assets compared to three years ago, with a corresponding decrease in U.S. equity allocations.

“Corporate plans posted the highest median return in second quarter 2014 (4%) due to their stronger weighting to equities,” says John Houser, senior consultant for BNY Mellon’s Global Risk Solutions group, based in New York. “Equities contributed to overall plan results, with non-U.S. equities gaining 4.68% and U.S. equities right behind at 4.50%. The difference between the highest (corporates) and lowest performing plan type (Taft-Hartley) was a significant 78 basis points.”

The BNY universe results for second quarter also show:

• Nearly all (99%) of plans in the BNY Mellon Master Trust universe returned positive results during the quarter;
• Forty percent of plans matched or outperformed the custom policy return for second quarter 2014;
• Corporate plans recorded the highest median return (4%), followed by public plans (3.85%); and
• The median allocation to the alternatives/other asset class was 23%, up from 18% three years ago, while median allocation to U.S. equity was 27%, down from 32% three years earlier.

According to BNY Mellon, U.S. equities posted a quarterly median return of 4.50%, versus the Russell 3000 Index return of 4.87%. Non-U.S. equities saw a median return of 4.68%, slightly behind the Russell Developed ex U.S. Large Cap Index result of 4.70%. U.S. fixed income had a median return of 2.35%, versus the Barclays Capital U.S. Aggregate Bond Index return of 2.04%. Non-U.S. fixed income posted a median return of 3.68%, compared to the Citigroup Non-U.S. World Government Bond Index return of 2.64%. Real estate had a median return of 3.06%, versus the NCREIF Property Index result of 2.91%.

The average asset allocation in the BNY Mellon U.S. Master Trust Universe for the second quarter was as follows: U.S. equity, 27%; U.S. fixed income, 27%; non-U.S. equity, 17%; non-U.S. fixed income, 1%; real estate, 4%; cash, 1%, and alternatives/other, 23%.

With a market value of more than $2.6 trillion and an average plan size of $3.9 billion, the BNY Mellon U.S. Master Trust Universe is a fund-level tracking service that can be used to make peer comparisons of both performance and asset allocation results. The universe consists of 661 corporate, foundation, endowment, public, Taft-Hartley, and health care plans.