Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

19181

Equity market downturn weighs on institutional asset owners, says Northern Trust

RELATED TOPICS​

In the third quarter of 2015, institutional asset owners lost 4.6 per cent at the median, according to Northern Trust Universe data. This marked a noteworthy drop from the 0.2 per cent median gain recorded in the second quarter.

The Northern Trust Universe tracks the performance of about 300 large US institutional investment plans, with a combined asset value of approximately $899 billion, which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.

Since 1998, the third quarter has averaged a -0.25 per cent return. The most recent third quarter return of -4.6 per cent ranks in the bottom quartile all-time of third quarter returns as measured by Northern Trust Universe data.

Corporate ERISA plans were the relative best performer among plan types last quarter, losing 3.9 per cent at the median, while Foundations & Endowments lost 4.7 per cent and Public Funds lost 4.9 per cent. Corporate ERISA plans returned to having the highest relative return after being the worst-returning plan type in the second quarter. All plan types had a median decline of at least 2 per centage points compared to the prior quarter.

“Weak equity returns significantly impacted institutional asset owners. The S&P 500 lost 6.4 per cent in the third quarter while the MSCI EAFE index lost 10.2 per cent. Having the smallest exposure to equities was a key factor behind the relative outperformance of corporate ERISA plans,” says Bill Frieske, senior investment performance consultant, Northern Trust Investment Risk & Analytical Services. “Another factor helping corporate ERISA plans was the longer duration of their fixed income programs. Corporate pension plans generally have been lengthening the duration of their fixed income programs while at the same time adding dollars to the allocation relative to Public Funds and Foundations & Endowments. The third quarter saw interest rates decline pushing up returns for long duration bonds.”

Private equity, real estate and fixed income programs all generated positive results in the third quarter while US equity and international equity were significantly negative. Private equity was the best returning asset class in the third quarter with the median private equity program up 3 per cent. Real estate was up about 2.3 per cent, and the median bond program was up only 0.4 per cent. International equity was down more than 10 per cent, and the median US equity program was down -7.6 per cent.

Latest News

Amid a challenging fund-raising environment, regulatory changes and technological advancements, distribution strategy is more important..
Theta Capital has launched its fourth Theta Blockchain Ventures vehicle to invest in core blockchain..
Rabobank has completed a series of groundbreaking pilots to execute more than EUR2 billion in..

Related Articles

British pound coin
Fixed income’s return to favour following widespread interest rate rises has led to investors overcrowding sterling investment grade credit, delegates at the Pensions and Lifetime Savings Association investment conference have heard...
Fixed income’s return to favour following widespread interest rate rises has led to investors overcrowding sterling investment grade credit, delegates..
Sustainable Economy Top Panel
Europe is driving the growth in sustainable investment with global assets under management in ESG-labelled funds passing USD2.8 trillion...
Europe is driving the growth in sustainable investment with global assets under management in ESG-labelled funds passing USD2.8 trillion...
Pension funds
UK institutional investors are questioning the value of investing in private markets despite pressure from government to finance the country’s net zero and levelling up ambitions...
UK institutional investors are questioning the value of investing in private markets despite pressure from government to finance the country’s..
Juan Nozal, Mapfre Asset Management
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024, in what he predicts will be an outstanding year for this asset class...
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024,..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by