The median public fund gained 1.4%
in the 12 months ending June 30, ahead of foundations and endowments, which
lost 0.4% at the median, but behind corporate ERISA plans, which gained 3.9% at
the median. Public funds have a higher allocation to international equities
than other segments in the Northern Trust Universe – 16.7% at the median,
compared with 10.7% for Corporate ERISA and 7.8% for foundations and
endowments – and international equities were the worst-performing major
asset class in that period. The median international equity program lost 13.1% in
the 12 months ending June 30.
“Public funds have had large
allocations to international equity for the last decade, and have in recent
years experienced volatility in this asset class,” Frieske said. “While U.S.
equity is still the largest asset class in most public funds, its share has
dropped from 43% to 32% for the median plan in the last 10 years. Public funds
have the smallest allocation to hedge funds of any segment in our universe, but
its share has grown in the last decade from 2% to 9% at the median.”
The Northern Trust Universe
represents the performance of about 300 large institutional investment plans,
with a combined asset value of approximately $712 billion, which subscribe to
Northern Trust performance measurement services.