Europe bolsters institutional plans' 3Q gains

By BenefitsPro

By Paula Aven Gladych

Institutional investment plans experienced a solid third quarter, boosted by strong equity returns in general and from developed European markets, according to data from Northern Trust Universe.

The Northern Trust Universe tracks the performance of about 300 large U.S. institutional investment plans with a combined asset value of $834 billion.

The median plan in the public funds segment gained 4.9 percent in the third quarter ending Sept. 30, while corporate ERISA plans gained 4.4 percent and foundations and endowments returned 4.3 percent at the median.

The huge gains in public funds were attributed to a larger allocation to international equities, where the median investment program in the Northern Trust Universe gained 9.3 percent in the third quarter. The median public fund plan had 19.1 percent of its assets invested in international equity, while corporate ERISA plans had 11.8 percent and foundations and endowments had 12 percent invested in that asset class.

U.S. equity programs in the Northern Trust Universe returned 7 percent at the median (compared to 6 percent for the Russell 1000 Index) in the third quarter and 22 percent (compared to 20.76 percent for the Russell 1000). Private equity and real estate investment programs returned less than 3 percent in the quarter while returns for fixed income and hedge funds were closer to 1 percent at the median during the three-month period.

Corporate ERISA plans had 31.5 percent of their assets allocated to U.S. fixed income in the third quarter. Foundations and endowments invested more in alternatives than other segments, including 23 percent allocated to private equity and 17.7 percent to hedge funds.

Northern Trust Corporation provides investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide.

Originally published on