Favorable Returns Seen for Institutional Assets

These results make it the fourth year in the last five for assets to reach that performance level, according to Wilshire TUCS, which is used as a benchmark for the performance and allocation of institutional assets in North America.

“This was a quarter and a year where exposure to U.S. equities trumped all other asset classes. The Wilshire 5000 Total Market Index was up 10.11% and 33.07%, respectively, during the fourth quarter and in 2013, versus international equity’s 4.77% and 15.29%, respectively, for the MSCI AC World ex U.S.,” says Robert J. Waid, managing director, Wilshire Associates.

“Bonds were the clear laggard as the Barclays U.S. Aggregate’s followed its first negative quarter since 2006, the first quarter of 2013, with losing second and fourth quarters ending the year down -2.02%. This translates to a larger range of plan returns with a low of 2.97%for Taft-Hartley Health and Welfare Funds and a high of 5.55%for Taft-Hartley defined benefit plans. The spread for 2013 returns is even larger with a low of 7.22%for Taft-Hartley Health and Welfare Funds and a high of 17.82%for Taft-Hartley defined benefit plans,” notes Waid.

All plan types had a median return of 4.81%, bettering their strong third quarter performance, Waid observes. Three of the four quarters in 2013 had median returns for All Master Trusts that exceeded 4%, resulting in a median 2013 return of 14.66% making this the fifth year in a row of positive median returns. He notes that in nine out of the last 10 years, all plan types had positive returns, with six of them in the double digits.

“Since small plans generally have larger exposure to U.S. equities than large plans, it is not surprising that small plans slightly outperformed larger plans,” says Waid. “All plan types with assets greater than $1 billion had median returns of 4.73% and 14.40% for the quarter and year, respectively.”

Wilshire Associates is an investment consulting and services firm that works with plan sponsors, investment managers and financial intermediaries.