The median plan for the 583 corporate, foundation, endowment, public, Taft-Hartley and healthcare funds that make up the BNY Mellon US Master Trust Universe posted a combined -0.55% return for the fourth quarter of 2007, the first negative quarterly return since the second quarter of 2006.
Despite the volatility, year-end performance for the median plan was 8.28%, marking the fifth consecutive year of positive returns.
The BNY Mellon U.S. Master Trust Universe represents a combined market value of $1.8 trillion, with an average plan size of $3.0 billion.
“In contrast to the third quarter of 2007, the majority of plans posted negative returns in the fourth quarter, with the best performing plan posting nearly a 4.2% gain and the least returning 4.2%. For the full year, though, all plan members were in the black, albeit with a dispersion of 21.8 percentage points between the lowest and highest performers,” says Greg Stewart, first vice president and regional product manager of BNY Mellon Asset Servicing.
Endowments were the top performing plan-type for the fourth quarter with a 0.06% median return, followed by healthcare, foundations, Taft-Hartley, corporate and public plans.
“Endowments and healthcare plans were able to post positive returns for the quarter, and for the year-end period ending 31 December 31 2007, endowments remain the strongest performing segment with the median plan posting a return of 12.10%, over 350 basis points ahead of foundations, the next best performing segment,” adds Stewart. “Endowments’ lower allocation to the U.S. equity market is one of the reasons for the relative performance, along with their higher allocation to alternatives. Over the extended periods, underweighting fixed income and greater allocations to international equity and alternatives have helped endowments outperform other plan types.”
The average asset allocation in the U.S. Master Trust Universe for the fourth quarter was: U.S. Equity 35%, U.S. Fixed Income 25%, Non-U.S. Equity 19%, Non-U.S. Fixed Income 1%, Alternative Investments 8%, Real Estate 3%, Cash 1%, and Other 8%.