Institutional Investment Returns Rebound in Second Quarter

Institutional plan sponsors saw significant investment gains in the second quarter, according to the Northern Trust Universe. Markets rebounded after a massive sell-off in equities at the start of the coronavirus pandemic, helping to earn a median plan return of 10.6% in the second quarter, Northern Trust found.

The Northern Trust Universe tracks the performance of more than 320 large U.S. institutional investment plans, with a combined asset value of more than $1 trillion.

Public funds had a median return of 11.14% in the second quarter, the highest of all the institutional segments. Corporate Employee Retirement Income Security Act (ERISA) pension plans returned 10.55% at the median, and foundations and endowments produced a 9.24% median return for the quarter.

“Investors’ willingness to take on additional risk propelled returns in the equity and corporate fixed income sectors, bringing those markets close to their all-time highs by the end of the second quarter,” says Mark Bovier, regional head of investment risk and analytical services at Northern Trust. “Institutional plans with higher allocations to those sectors benefited from the risk exposure, while alternative asset classes trailed in relative performance during the quarter.”

Northern Trust says U.S. equity is a core holding for most plans in the Northern Trust Universe, and the Northern Trust U.S. equity program universe was up by a 22% median in the quarter, the highest quarterly return posted this century.