Northern Trust: Corporate Plans Rank No. 1 in '09 Returns

(January 26, 2010) – U.S. institutional investment plan sponsors achieved double-digit returns in 2009, according to data in the Northern Trust Universe.

With a median return of 22.3% in 2009, Corporate Pension Plans topped returns for the year. Public Funds and Foundations & Endowments followed, with 20.3% and 17.9% returns respectively. In the fourth quarter, Public Funds led with a 3.7% median increase, while Foundations & Endowments and Corporate Pension Plans posted median returns of 3.6 % and 3.3%, respectively, according to a news release by Northern Trust.

“Regardless of differences in performance between Corporate Pension, Public Fund and F&E segments, a median return of 19% for all plans ranks 2009 as one of the best years in more than a decade for institutional investors,” said Frieske in the release. “Following the worst year in our records in 2008, and six straight quarters of losses, the past three quarters of positive returns have noticeably improved the longer-term numbers for institutions.”

Higher-risk asset classes boosted returns in 2009. For example, the Russell 2000 Growth index returned 34.5% for the year, while the S&P 500 returned 26.5% during the same period. For non-U.S. stocks, the MSCI Emerging Markets index returned 79% for the year. Comparatively, the MSCI EAFE returned 32.5%.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

The Northern Trust Universe represents the performance of more than 300 large institutional investment plans, with a combined asset value of approximately $626 billion.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(January 26, 2010) — Goldman has shut down its Global Equity Opportunities hedge fund, which closed at $200 million, compared to its peak of more than $6 billion.

The fund is a subgroup of the quantitative hedge fund, which is losing its chairman. Robert Litterman, chairman of Goldman Sachs Group Inc.’s quantitative hedge fund group, is retiring at the end of the month – a departure ahead of President Barack Obama’s recent call regulating what the nation’s largest banks can do with depositors’ money.Golman said Litterman’s departure is unrelated to the closing of the Global Equity Opportunities fund.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

During his 23 years with Goldman, Litterman advised the quantitative hedge fund unit that ran Global Equities Opportunities, and he was previously head of Goldman’s risk department. Additionally at Goldman, he co-founded with economist Fischer Black, who died in 1995, the Black-Litterman mathematical model for portfolio allocation in 1990. He worked previously with the Federal Reserve Bank of Minneapolis and with the Massachusetts Institute of Technology as an assistant professor in the economic department.

President Obama recently announced that he supports a plan to prevent banks from “owning, investing in or sponsoring” hedge funds and private equity funds. “If financial firms want to trade for profit, that’s something they’re free to do,” he said in the press conference last week. “Indeed, doing so –- responsibly –- is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

Nevertheless, Goldman Sachs regularly invests in hedge funds that it manages, and the firm’s closing of the Global Equity Opportunities fund doesn’t reflect a departure from hedge fund investing. According to the Wall Street Journal, Goldman said that of its $871 billion of assets under management, $146 billion is from alternative investments, including hedge funds and funds of hedge funds run by its quantitative team.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742