Most institutional investment plan sponsors posted solid performance in 2005, according to a report by Northern Trust Universe, which tracks the performance results of the more than 300 large institutional investment plans that subscribe to Northern Trust performance measurement services.
Of subscribers, all plan types had steady returns in 2005 after the first quarter, resulting in solid gains for the year. Foundations and endowments gained 8.2%, at the median, for the 12 months ending December 31, 2005. ERISA defined benefit plans and Public Funds both finished up about 7.8% on the year.
“Foundations & Endowments outpaced ERISA and Public Funds plans for the year due to their higher strategic allocation to private equity and lower allocation to fixed income,” said Joe Nardulli, product manager, investment risk and analytic services, Northern Trust. “However, most institutional plan sponsors were able to assemble a stable of US equity managers within their plans that were capable of producing group performance that finished ahead of the broad equity indexes over the past year.”
In the fourth quarter of 2005, ERISA and foundations and endowments plans posted 2.3% returns at median, while public funds plans returned 2.1% for the quarter. Individual US equity managers were able to match the performance of the broad market indexes in the quarter.
“Results for the Northern Trust Universe show that institutional investors benefited in 2005 from the continuation of a three-year trend of positive performance in the U.S. equity markets,” Nardulli said.
The median ERISA plan gained 14.5% over three years and 5% over five years for the period ending December 31, 2005, compared to returns of 7.6% and 3.8% for those time frames a year earlier. Public funds and foundations and endowments posted returns of 14.7% and 14.6%, respectively, over three years and 6% and 5.5% over five years.