Institutional Plans See Strong Q1 2019 Returns

U.S. equities were the driver of rebounds from the 4th quarter of 2018, according to the Northern Trust Universe and the Wilshire Trust Universe Comparison Service.

Institutional plan sponsors rebounded with solid investment performance in the first quarter of 2019, according to both the Northern Trust Universe and the Wilshire Trust Universe Comparison Service (TUCS).

The median return of 7.8% in the first quarter marked the ninth-best quarterly median return in the past 20 years for plans in the Northern Trust Universe. U.S equities were the major driver of results, with the median domestic equity program in the Northern Trust Universe gaining 14% in the quarter. International stocks chipped in, as the median non-U.S. equity program returned 10.5% in the quarter.

Wilshire also cites healthy returns for the Q1 rebound as it reported an all-plan median return of 8.26%. U.S. equities, represented by the Wilshire 5000 Total Market Index, rose 14.11% for the quarter. International equities, represented by the MSCI AC World ex U.S., also rose 10.31%.

Of the three institutional groups tracked by Northern Trust, Corporate Employee Retirement Income Security Act (ERISA) pension plans had the best first quarter on a relative basis. The median ERISA plan was up 8.3% while the median Public Fund was up 7.8% and the median Foundation & Endowment gained 7%.

“ERISA plans benefited in the first quarter from a larger allocation to domestic equities, longer-duration bonds and little exposure to alternative assets,” says Bill Frieske, senior investment performance consultant, Investment Risk and Analytical Services. “Domestic equities were the best-returning asset class in the first quarter, while bonds were solid and alternatives, including private equity and hedge funds, had flat returns in the quarter.”

According to Wilshire TUCS, Taft Hartley defined benefit (DB) plans, which had the largest allocation to U.S. equities (49.26%) posted the highest Q1 gain, at 8.93%. Foundations and Endowments followed, with an 8.80% quarterly return. Public DB plans posted a Q1 gain of 8.36%, and Corporate DB plans returned 7.93%.