Taft Hartley, Public Plans Outperform Other Institutional Investors in Q3

BNY Mellon says higher allocations to U.S. equity drove outperformance.

The BNY Mellon U.S. Master Trust Universe returned a median 2.22% in the third quarter of 2018—a second consecutive quarter of positive performance for the year.

In aggregate, Master Trust Universe plans reported a one-year return of 6.33%, lagging its three-year annualized return of 9.15% and five-year annualized return of 7.69%. 

As during Q2 2018, corporate and health care plans underperformed, with quarterly returns of 200 basis points and 219 basis points, respectively.

Taft Hartley and public plans were the top performers. BNY Mellon says higher allocations to U.S. equity drove outperformance as U.S. fixed income sustained its streak as the lowest performing asset class. Taft-Hartley’s median return was 2.56% followed by public plans at 2.49%.

“Public plans benefited from higher allocations to U.S. equities and lower allocations to U.S. fixed income investments versus other plan types. They overweighted U.S. equity at a 27% allocation versus 24% for the Master Trust Universe as a whole, and underweighted U.S. fixed income at 24% versus 28% for the whole,” says Frances Barney, CFA, head of Asset Owner Product Management and Global Risk Solutions at BNY Mellon.

U.S. equities posted a quarterly median return of 6.17%, versus the Russell 3000 Index return of 7.12%. Non-U.S. equities saw a median return of 0.70%, compared to the Russell Developed ex U.S. Large Cap Index result of 1.23%. U.S. fixed income had a median return of 0.27%, versus the Barclays Capital U.S. Aggregate Bond Index return of 0.02%. Non-U.S. fixed income had a median return of 0.62%, versus the FTSE World Government Bond Non-US Index return of -2.19%. Real estate had a median return of 1.96%, versus the NCREIF Property Index result of +1.67%.

The BNY Mellon U.S. Master Trust Universe offers peer comparisons of performance by plan type and size. It consists of 534 corporate, foundation, endowment, public, Taft-Hartley, and health care plans with a total market value of more than $2.2 trillion and an average plan size of more than $7.0 billion.

BNY Mellon U.S. Master Trust Universe users are now able to take advantage of BNY Mellon Asset Strategy View as a separate service for additional analysis. Asset Strategy View layers big data analytics onto detailed asset allocation, performance and cash flow data for the majority of the BNY Mellon U.S. Master Trust Universe. It provides additional insight into underlying market trends and investor activity.