“All plan types suffered significantly from volatile and declining markets in the third quarter, with Corporate plans performing especially poorly relative to their assigned benchmarks,” said William Frieske, performance consultant, Northern Trust Investment Risk & Analytical Services, in a press release.
Corporate plans posted a median return of -8.8% for the third quarter, while Public Fund and Foundation & Endowment plans reported median returns of -9.0% and -8.5%, respectively. Corporate pension plans had the lowest one-year performance of all three segments, with a median return of -15.5%, compared with -14.8% for public funds and -13.2% for foundation and endowment plans.
“In addition to extreme market volatility, plans in all segments were hampered by the underperformance of fixed income programs,” Frieske said in the release. “The median return for Total Fixed Income Programs in the Northern Trust Universe was -2.8% in the third quarter, compared to a -0.5% return for the Lehman Aggregate Bond Index. Two primary factors—duration and credit exposure—were responsible for fixed-income program underperformance relative to the bond market index. As a result, Corporate pension plans lagged their assigned performance benchmarks by the widest margin in at least a decade.’
Three- and five-year returns remain positive, Northern Trust said.
The Northern Trust Universe represents more than 300 institutional investment plans, with a combined asset value of approximately $660 billion, which subscribe to Northern Trust performance measurement services.