Institutional Investors Make Big Comeback in Q209

The Northern Trust Universe saw a median return of 10.2% for the second quarter following six straight quarters of losses (see Institutional Investors Post Sixth Straight Quarter of Losses ). A Northern Trust press release said Corporate ERISA Plans led the way in the second quarter, posting a median return of 12%, while Public Funds gained 11% and Foundations & Endowments returned 9.3%.

The quarterly results were the second best in the past decade for Corporate Plans and third best for Public Funds in that period, according to the announcement. “Corporate and Public plans benefited the most from their exposure to equities, which outperformed other asset classes, while Foundations & Endowments were held back to some extent last quarter by their relatively large allocation to hedge funds,” said William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services.

In the Northern Trust Universe, the Total Equity Program gained 19.6% at the median in the second quarter, compared to losses of 10% in the first quarter and 22.2% in the fourth quarter of 2008. The S&P 500 Index of U.S. stocks was up 15.9% and non-U.S. stocks gained 28%, as measured by the MSCI ACWI ex-US Index, in the second quarter.

Northern Trust said the strong second quarter had a positive impact on long-term performance. Three-year median performance improved by approximately 350 basis points over the prior quarter’s results, while five-year medians improved by about 200 basis points.

The three-year and five-year returns, respectively, are as follows:

• Corporate Plans – 2.8%,2.2%;
• Public Funds – 3%, 2%; and
• Foundations & Endowments   -2.3%, 2.3%.

The Northern Trust Universe represents the performance results of more than 300 large institutional investment plans, with a combined asset value of approximately $540 billion, which subscribe to Northern Trust performance measurement services.