US Institutional Plan Sponsors See Moderate Gains

(April 27, 2010) — US institutional plan sponsors experienced moderate gains in the first quarter of 2010, with a median return of 3.5% for U.S. pension plans, endowments and foundations in the Northern Trust Universe.

“This year started off with similar results as the fourth quarter of 2009, an indication that consistent performance is returning to institutional plans,” said William Frieske, senior performance consultant of Northern Trust Investment Risk & Analytical Services, in a statement, adding that returns in Q1 were driven by higher-risk assets. Small-cap stocks performed best among domestic equities and in international equities, emerging markets led the way, while high yield bonds were the highest-returning segment of the fixed income market, he said.

According to Northern Trust, corporate pension plans had the highest median returns (3.7%), followed by public pension funds (3.6%), and endowments and foundations (combined, at 3.3%).

Although alternative assets, such as private equity and hedge funds, continue to lag behind traditional equities, the gap is shrinking and if the trend continues they’ll surpass, said Northern Trust’s Frieske to ai5000.

The Northern Trust Universe represents the performance of about 300 large institutional investment plans with a combined asset value of about $637 billion.