U.S. Institutional Plan Sponsors Finished 2011 with Fourth Quarter Gains, according to Northern Trust Universe Data

Published on Wednesday, 01 February 2012 11:21 Written by TradersHuddle Staff

CHICAGO-( Business Wire )-

Northern Trust announced today that U.S. institutional investment plan sponsors in the Northern Trust Universe gained 4.5 percent at the median in the fourth quarter of 2011, with a surge in U.S. equities creating a positive ending to a mixed year for most plans. The Northern Trust Universe represents the performance of about 300 large institutional investment plans, with a combined asset value of approximately $689 billion, which subscribe to Northern Trust performance measurement services.

Institutional investors eked out a gain overall for the full year 2011, with a median return of 0.8 percent for all plans in the Northern Trust Universe. The results differed by segment, however. Corporate ERISA Pension Plans gained 2.3 percent at the median while the other two segments were practically flat, with the median Public Fund up by 0.9 percent and the median plan in the Foundations & Endowments segment down by 0.6 percent for the 12 months ending December 31, 2011.

“Global market volatility contributed to an up-and-down year for institutional plan sponsors in 2011, with two quarters of moderate gains followed by a nearly 10 percent drop in the third quarter and a sharp recovery at year-end,” said William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services. “Last quarter’s positive results were in line with historical trends in the Northern Trust Universe, with fourth quarter median returns typically being the highest in the calendar year.”

Corporate Pensions led in the fourth quarter with median returns of 5.6 percent, as Public Funds gained 5.4 percent and Foundations & Endowments advanced 4.2 percent at the median. U.S. equities were the primary driver of performance, with the median U.S. Equity Program in the Northern Trust Universe gaining almost 12 percent in the fourth quarter. International Equity Programs gained almost 4 percent in the fourth-quarter while Fixed Income Programs were up 2 percent. In alternative asset classes, Real Estate gained 2 percent, while Private Equity was down 1.6% and Hedge Funds were down 0.4% for the three months ending December 31. Hedge Fund and Private Equity returns can lag the data for traditional stocks and bonds.

Asset allocation again played a key role in relatively wide range of one-year performance figures. Corporate pension plans had the largest allocation (nearly 35 percent at the median) to fixed income in the third quarter, buffering losses, and also the largest allocation to U.S. equity (nearly 37 percent at the median), which contributed to gains in the fourth quarter. Public Funds performance suffered from a larger allocation to International Equities (16 percent) while Foundations & Endowments’ larger allocation to hedge funds (7 percent) was a drag on performance. More detail on asset allocation and performance of funds can be found on the Investment Risk & Analytical Services web page.

Longer-term performance results for all plans in the Northern Trust Universe are:
		3 Yr			5 Yr
Corporate ERISA Pension Plans		12.5	%		2.7	%
Public Funds		11.1	%		2.0	%
Foundations & Endowments		9.9	%		1.6	%

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2011, Northern Trust had assets under custody of US$4.3 trillion, and assets under investment management of US$662.9 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com.

Northern Trust CorporationJohn O’Connell, +1 312-444-2388John_O’Connell@ntrs.comorNewton Sears, +1 312-444-3094Newton_Sears@ntrs.comhttp://www.northerntrust.com