Market Returns Help Boost Institutional Investor Returns

Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS) saw a median return of 4.02% for all plan types in the first quarter and a median one-year gain of 10.49%.

Public funds posted a quarterly return of 4.10%, while foundations and endowments posted a quarterly return of 4.38%. Corporate funds’ and Taft Hartley defined benefit plans’ quarterly returns were each 3.81%, and Taft Hartley health and welfare funds posted a 2.52% quarterly return. Wilshire explains that Taft Hartley defined benefit plans, Taft Hartley health and welfare funds, and corporate funds experienced median returns worse than the 60/40 portfolio, which pulled the median return for all plan types down.

“This quarter marked the sixth consecutive positive quarter, which is the longest string of positive quarterly returns for all plan types since June 1998, which marked a string of 14 positive quarters in a row. Not only was this the sixth positive quarter in a row for all plan types, but it was the best quarter since the fourth quarter of 2013, which saw a median return of 4.81%,” says Robert J. Waid, managing director, Wilshire Associates. “This quarter’s return boosted the one-year return to 10.49% for the year ending March 31, 2017, compared to 7.24% for the year ending December 31, 2016.”

Wilshire TUCS returns were supported by strong performance across all major asset classes. The Wilshire 5000 Total Market Index returned 5.61% for the first quarter and 18.35% for the year ending March 31, 2017, while the MSCI AC World ex U.S. (Net) for international equities rose 7.86% in the first quarter and 13.13% for the year. The Wilshire Bond Index also gained 1.27% in the first quarter and 2.92% for the year.

In the first quarter and for the year ending March 31, 2017, larger public funds and foundations and endowments outperformed smaller public funds and foundations and endowments. Large foundations and endowments continued to have significant exposure to alternatives as the median exposure rose to 40.34% in the first quarter.

All plan types with assets greater than $1 billion experienced median returns of 4.16% for the first quarter and 11.04% for the year ending March 31, 2017, compared to plans with assets less than $1 billion, which experienced median returns of 3.98% for the first quarter and 9.93% for the year.