Northern Trust says most institutional investment plan sponsors in the universe of funds measured by its performance analytics group enjoyed strong growth in 2003.
The Northern Trust Universe represents the performance results of over 300 large institutional investment plans, with a combined asset value of over $390 billion that subscribe to Northern Trust performance measurement services.
Fuelled by the rebounding equity markets, the median ERISA defined benefit plan in the universe was up 24.2% for the year ending December 31, 2003. For the same period, public funds were up 22.8%, and foundations and endowments gained 23.0%.
“The US equity programs of most plans outpaced the broad market indexes due to greater weighting to small and mid cap stocks that were favored over larger stocks for the 12-month period,” says Paul Finlayson, Vice President, Northern Trust. “The private equity and real estate segment gains were not as dramatic, which created a drag on the relative performance of plans having large allocations to those asset classes.”
Longer-term plan returns were buoyed by the recent twelve-month strength. As of 31 December 2003, the cumulative annualized five-year median return of all plans measured was 4.9%, up from last years five-year median of 3.2%. The ten-year all plans median was 9.6%, up from last years ten-year median of 8.8%. “These are significant increases but it will take sustained performance and time to help funded statuses hurt by lowered discount rates and prior years negative performance,” says Finlayson.