Institutional asset owners returned a median 1.1% in the second quarter of 2024, according to the Northern Trust Universe, which tracks the performance of 388 institutional plans with assets of at least $100 million each. Plans tracked by the universe total more than $1.4 trillion in assets.
According to the tracker, corporate plans governed by the Employee Retirement Income Security Act returned a median 0.1% in the quarter, while public pension funds and the combined category of foundations and endowments returned a median 1.2% and 1.3%, respectively.
Materials and industrial stocks sold off due to inflation concerns, Northern Trust reported, and large caps outperformed small caps in the second quarter. The Russell 2000 Index of small-cap stocks returned negative 3.3%, while the Russell 1000 Index of large-cap stocks gained 3.6%. The Northern Trust U.S. Equity Program Universe returned 1.9% in 2Q.
“Institutional investors benefited from the equity market rally in the first half of the year, ahead of fiscal year-end for many plans on June 30,” said John Turney, global head of total portfolio solutions at Northern Trust, in a statement. “However, as 2024 progresses, it’s clear investors remain focused on inflation as they await further rate cuts from the Fed.”
According to Northern Trust’s foundations and endowments universe, these institutional investors returned median one-, three- and five-year returns of 10.6%, 3.4% and 8.4%, respectively, as of the end of June. These investors, often proponents of the endowment model of investing, had a median allocation of 22.1% to private equity and 8.7% to hedge funds.
Public funds tracked by Northern Trust’s public funds universe returned a median of 9.3%, 3.1% and 7.1% for the past one, three and five years, respectively. These funds had median allocations of 27.4% and 12.6% to domestic and international equities, respectively, as well as a median allocation of 22.4% to fixed income and 13.7% to private equity.
ERISA plans returned 5.0%, -2.1% and 3.7% for the past one, three and five years, respectively. These funds had a median allocation of 55.9% to fixed income and 1.9% to private equity.
Plans tracked by the universe are subscribers to performance measurement services offered by Northern Trust’s asset servicing group.
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Tags: Asset Owners, Endowments, Foundations, institutional investors, Northern Trust, Northern Trust Universe, Pensions