Northern Trust Universe Data: Institutional Plans Post Negative Returns as Global Equity Markets Sell Off in Q3
07 November 2023 - 2:15AM
Business Wire
U.S. institutional investment plans were challenged in the third
quarter of 2023 by global equity market declines driven by investor
concern that a longer period of high interest rates will be needed
to slow the U.S. economy. The median return for institutional asset
owners included in the Northern Trust All Funds Over $100 million
plan universe was down -2.2% for the quarter ending September 30,
2023.
The Northern Trust Universe tracks the performance of 398 large
U.S. institutional investment plans, with a combined asset value of
more than $1.3 trillion, which subscribe to performance measurement
services as part of Northern Trust's asset servicing offerings.
The Northern Trust Foundation and Endowment (F&E) universe
produced a -1.1% median return for the quarter, while the Northern
Trust Public Funds universe median return was down -1.7% and the
Northern Trust Corporate (ERISA) universe median return was
-5.1%.
“We saw a decline in U.S. equity returns during the quarter, and
this is likely due to the fact that investors feel the economy has
been slow to respond to the Federal Reserve’s recent rate
increases,” said Amy Garrigues, global head of Investment Risk and
Analytical Services at Northern Trust. “As a result, there is a
lingering fear that higher rates will remain for longer than was
previously anticipated.”
The Northern Trust U.S. Equity Program universe generated a
-3.3% median return for the third quarter. Large cap stocks
outperformed small cap stocks, with the Russell 1000 large cap
index returning -3.2%, compared to the Russell 2000 small cap index
which returned -5.1% for the period.
The Northern Trust U.S. Fixed Income program universe median
return was down -2.9% for the quarter and negative results were
driven by climbing government bond yields. The U.S. ten-year
government bond yield rose from 3.81% to 4.59% during the quarter,
while the two-year government bond yield rose 16 basis points to
5.03%.
The F&E universe median one-, three- and five-years returns
were 9.9%, 6.9% and 6.2%, respectively. The F&E universe
Foundation and Endowment is continuing the trend to allocate funds
to the private equity asset class. The median U.S. equity
allocation for the F&E universe increased to 19.2% during the
quarter. The median allocation to private equity now stands at
25.1%, while the median allocation to U.S. equity allocation
decreased to 17.6% during the quarter and U.S. fixed income fell to
8.3%.
Public Funds universe median multi-period returns for the one-,
three- and five-year periods stand at 9.1%, 5.6% and 5.2%,
respectively. The median third quarter allocation to U.S. and
international equity are 27.9% and 12.1% respectively. The median
exposure to U.S. fixed income for Public Funds is 22.9%. The
segment continues to increase the allocation to Private Equity,
where the universe median allocation now stands at 15.1%.
ERISA plan universe median one-, three- and five-years returns
were 5.1%, -1.2% and 2.7%, respectively. The U.S. fixed income
asset class remains the largest ERISA plans allocation, with a
median allocation of 49.8%. The segment continues to have small
allocations to Alternative assets where the median allocation to
Private Equity is 3.4% and the median allocation to Hedge Funds is
0%.
Results as of September 30, 2023:
3rd Qtr
1Y
3Yr
5Yr
ERISA
-5.1%
5.1%
-1.2%
2.7%
Public Funds
-1.7%
9.1%
5.6%
5.2%
Foundations & Endowments
-1.1%
9.9%
6.9%
6.2%
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider
of wealth management, asset servicing, asset management and banking
to corporations, institutions, affluent families and individuals.
Founded in Chicago in 1889, Northern Trust has a global presence
with offices in 25 U.S. states and Washington, D.C., and across 22
locations in Canada, Europe, the Middle East and the Asia-Pacific
region. As of September 30, 2023, Northern Trust had assets under
custody/administration of US$14.2 trillion, and assets under
management of US$1.3 trillion. For more than 130 years, Northern
Trust has earned distinction as an industry leader for exceptional
service, financial expertise, integrity and innovation. Visit us on
northerntrust.com. Follow us on X (formerly Twitter) @NorthernTrust
or Northern Trust Corporation on LinkedIn.
Northern Trust Corporation, Head Office: 50 South La Salle
Street, Chicago, Illinois 60603 U.S.A., incorporated with limited
liability in the U.S. Global legal and regulatory information can
be found at https://www.northerntrust.com/terms-and-conditions.
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version on businesswire.com: https://www.businesswire.com/news/home/20231106995256/en/
Europe, Middle East, Africa & Asia-Pacific: Camilla Greene
+44 (0) 20 7982 2176 Camilla_Greene@ntrs.com Simon Ansell + 44 (0)
20 7982 1016 Simon_Ansell@ntrs.com US & Canada: John O’Connell
+1 312 444 2388 John_O’Connell@ntrs.com
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