Institutional Investors See Modest Gains in Q1 2011

Plans in the Northern Trust Universe advanced 3.6% at the median in the first quarter of 2011.

Northern Trust reported that Public Funds had a median return of 3.9%, slightly ahead of Foundations & Endowments, with a median return of 3.7%, and Corporate Pension Plans, which gained 3.6% at the median in the three months ending March 31, 2011.   

Northern Trust said strong performance for U.S. stocks helped push up total plan returns, with active management contributing to results. The median U.S. equity program in the Northern Trust Universe gained 6.6% in the first quarter, about 25 basis points ahead of the 6.4% return for the Russell 3000 Index of U.S. stocks. Similarly, the median manager in the Northern Trust mid-cap universe was more than 100 basis points better than the Russell Mid-Cap Index and the median small-cap manager was about 70 basis points better than Russell 2000 Index.   

Among other asset classes, international equity was up 2.7% in the first quarter, while fixed income gained 1%, hedge funds returned about 4% and private equity was up 4.7%.  

In addition, Northern Trust data shows that across all plans, the composite allocation to U.S. equities has dropped from about 50% at year-end 2000 to about 35% in the first quarter of 2011. Fixed income has seen a modest increase in allocation from 27% to 30% over that same time period. The composite allocation to hedge funds, just above zero in 2000, has risen to 4.3% in 2011, while the allocation to private equity has increased from 3.5% to 6% across all plans in that time.   

The Northern Trust Universe represents the performance of about 300 large institutional investment plans, with a combined asset value of approximately $706 billion, which subscribe to Northern Trust performance measurement services.