US institutional funds gained positive returns for the sixth consecutive calendar year since the financial crisis, according to Wilshire Associates.
The consulting firm’s data showed all trusts—corporate and public pensions, endowments and foundations, and health care funds—reported a median return of 6% in 2014. They also returned a median of 11.17%, 9.32%, and 6.45% over the three-, five-, and ten-year periods, respectively.
Specifically, corporate pension plans outperformed all other institutional funds in 2014—with a median return of 6.92%—despite an overall uptick in de-risking and liability-driven investing.
Corporate funds larger than $1 billion did even better, with a median return of 8.36% last year. Their three- and five-year returns were also high at 11.23% and 10.04%.
Public pension plans of all sizes, Wilshire found, reported a median return of 6.76% last year, below the common target returns of 7.5% and 8% for most US publics. Benefiting from high exposures to US equities, public funds gained 12.15% and 9.95% over the three- and five-year periods. Over the 10 years ending December 31, 2014, they returned a median of 6.6%, Wilshire said.
Still, those with more than $5 billion under management tended towards stronger long-term performance: 7.09% in 2014, 12.2% over three years, and 10.18% for the last five years. These plans were also likely to hold more alternatives, with 10.64% compared to the 0.7% median allocation for all public plans.
Endowments and foundations, on the other hand, fell short of both corporate and public pension plans, the data revealed.
Holding a large exposure to alternatives—a median allocation of 10.58%—they returned just 5.36% last year. Their three-year and five-year returns were also lagging other funds’ at 10.93% and 8.92%, respectively.
In a separate report, Towers Watson found US pension fund assets grew 9% in 2014, bumping up total assets to a record high $22.1 trillion.
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