Institutional assets tracked by the Wilshire Trust Universe Comparison Service (TUCS) saw a median return of -4.53% in the third quarter—the worst quarterly performance in four years and the first back-to-back losing quarters since the quarter ending March 31, 2009.
Robert J. Waid, managing director at Wilshire Associates, says, “Taft Hartley Health and Welfare Funds was the best performing category losing only -2.79%, while the worst performing category was large Foundations and Endowments with assets greater than $500 million, which fell -5.37%.”
Corporate Funds and large Corporate Funds with assets greater than $1.0 billion saw median quarterly returns of -3.83% and -3.12%, respectively, as the only plan categories with median returns better than the 60/40 portfolio. At the same time, Taft Hartley Defined Benefit Plans and Public Funds had median returns of -4.81 and -4.61 percent, respectively.
“Global equity returns weighed heavily on the median returns for all plan types in the third quarter,” Waid says. “Though the Wilshire 5000 Total Market Index had its worst performance in four years by falling -6.91%, plans that diversified their equity exposure from large-cap U.S. equity to either U.S. small-cap or non-U.S. equity suffered more with returns of the Wilshire US Small-Cap Index falling -10.88%, and the MSCI AC World ex U.S. even worse, shedding -12.17%.”
He adds that bond returns normalized as the Barclays U.S. Aggregate Bond Index rose 1.23% for the third quarter for a trailing 12-month return of 2.94%. “This translates to most plan median returns underperforming the classic 60/40 portfolio return of -3.65%.”