US plan sponsors lost a median of 9% in the third quarter of 2011, ending a streak of four consecutive quarters with positive results, according to the Northern Trust Universe, which tracks performance of about 300 large investment plans.
Institutional plan sponsors endured another tough third quarter, with weak equity returns driving the losses, says William Frieske, senior performance consultant for Northern Trust Investment Risk & Analytical Services.
Frieske says over the past 15 years third quarters have tended to be the worst performers in the calendar year. Public funds have lost an average of 0.7% in third quarters over the past 15 years, while they have shown gains in the three other quarters first quarter, 0.8%; second quarter, 3.1%; and fourth quarter, nearly 5%.
Data released by Mercer earlier this month showed that funding levels of US pension funds were at their lowest point since World War II. Pensions in the UK, Mercer said, remained flat.
Corporate ERISA pension plans had the strongest third-quarter performance of all segments, with a loss of 7.5% at the median, Northern Trust says. Corporate ERISA plans benefited from higher allocations to fixed income. Fixed income programs in the Northern Trust Universe gained 2.1% in the quarter, while equities posted steep losses.
Even though the third quarter was challenging, institutional plan sponsors managed to keep pace with their assigned performance benchmarks, Frieske says. The median plan sponsor return was four basis points better than its benchmark for the quarter, indicating that active management across asset classes helped these plans outperform the markets somewhat. Over longer time periods plan sponsors have experienced about 45 basis points of excess performance relative to their assigned benchmarks.
(CG)