The second quarter of 2016 marked the third consecutive quarter of positive returns for institutional asset owners after two consecutive quarters of declines starting in the second quarter of 2015, Northern Trust Universe data revealed.
Plan sponsors gained approximately 1.9 percent at the median as against 0.7% recorded in the previous quarter.
Since 1998, the average second quarter median return has been 1.7%, placing this quarter slightly above average.
Corporate ERISA plans fared best among all plan types with a median return of 3% in the second quarter of 2016. Public Funds gained 1.7% while Foundations & Endowments netted 1.5% in the second quarter, the report says.
Non-US equities returned -0.2% at the median, while US equities returned 2.2% in the quarter.
Bill Frieske, senior investment performance consultant, Northern Trust’s Investment Risk & Analytical Services, said: “Differing returns across plan types were driven largely by the duration of their fixed income investments. In an effort to de-risk their defined benefit pension plans, corporate ERISA plan sponsors have been lengthening the duration of their fixed income programs.
“Interest rates declined in the second quarter, which increased returns for long duration bonds and helped boost Corporate ERISA plan returns.”
The Northern Trust Universe tracks the performance of approximately 300 large US institutional investment plans, with a combined asset value of approximately $899bn, which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.