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The Markets May 8, 2013
Institutional Investors See Another Good Quarter
Double digit U.S. equity returns powered a solid first quarter for all institutional plan types, according to the Wilshire Trust Universe Comparison Service (TUCS).
Reported by Rebecca Moore
“The first quarter performance spread for median plan return types was significant with a low return of 2.98% for the conservative Taft Hartley health and welfare funds to a high return of 5.98% for Taft Hartley defined benefit plans,” stated Robert J. Waid, managing director, Wilshire Associates. “The median quarterly return for all plans was 4.77%,” he added. Corporate funds had a quarterly return of 4.25%; public funds 5.20%; and foundation and endowments 4.59%.
“The spread can be primarily attributed to different exposures to the U.S. equity market,” noted Waid. “The Wilshire 5000 closed the quarter with its 16th all-time-high in 2013, resulting in a quarterly return of 10.91%. This almost matched the median U.S. equity plan return of 10.92%. Despite the Barclays U.S. Aggregate falling for the first time since 2006 with a -0.12% return, the median U.S. fixed income plan return was 0.28%.”
Even though these were the best plan returns since the first quarter 2012, all measured plan types underperformed the simple 60/40 (U.S. Equity/U.S. Bond) default asset allocation.The median allocation for all master trusts was 40.42% U.S. equities, 10.47% international equities, 27.01% U.S. bonds and 2.54% cash. For corporate funds, the median allocation was 35.96% U.S. equities, 8.42% international equities, 32.59% U.S. bonds, and 2.51% cash.
For public funds the median allocation was 44.27% U.S. equities, 13.43% international equities, 25.23% U.S. bonds, 3.02% cash, 3.48% real estate and 0.79% alternative investments. For foundations and endowments, the median allocation was 34.28% U.S. equities, 13.63% international equities, 19.93% U.S. bonds, 2.22% cash and 7.67% alternatives.
Taft Hartley defined benefit plans had 49.51% in U.S. equities, 7.74% in international equities, 29.24% in U.S. bonds, 2.99% in cash and 1.28% in real estate.
TUCS is a cooperative effort between Wilshire Analytics, the investment technology unit of Wilshire Associates Incorporated, and custodial organizations. Wilshire TUCS includes more than 1,700 plans representing in excess of $3.41 trillion in assets.