U.S. institutional investment plans benefited from strong global equity market performance in the first quarter of 2021, according to data from the Northern Trust Universe. With markets propelled by the distribution of COVID-19 vaccines in the United States and globally, the median plan in the Northern Trust Universe finished with a 3.3% return for the quarter ending March 31, 2021.
The Northern Trust Universe tracks the performance of more than 380 large U.S. institutional investment plans, with a combined asset value of more than $1.34 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.
“The first-quarter U.S. equity market rally was driven by two key events – the news that almost one-third of all U.S. adults had received at least one dose of a COVID-19 vaccination and government approval of a third stimulus relief package that injected $1.9 trillion into the economy,” said Amy Garrigues, Global Head of Investment Risk and Analytical Services at Northern Trust. “As a result of this market rally, the Northern Trust U.S. equity program universe reported a 7.1% median gain in the first quarter. U.S. fixed income, meanwhile, had negative returns of -2.6% at the median for the quarter due to expectations for increased inflation in the near term.”
Differing asset allocations produced divergent returns among segments of the Northern Trust Universe: Public Funds had a median return of 3.2% for the first quarter, while Corporate ERISA pension plans experienced a -1.0% median return and Foundations and Endowments had a 3.8% median return for the quarter.
Corporate ERISA plans had the largest median allocation to U.S. fixed income – 39.2% at the end of the quarter, up from 33.8% from five years ago. The median U.S. equity allocation was 27.5% and the median international equity allocation was 8.7%.
The Public Funds median allocation to U.S. equity was 33.9% in the fourth quarter and international equity was 15.3%, while the median exposure to U.S. fixed income was 24.5% for the quarter. The median exposure to private equity, real estate and hedge funds was 6.9%, 5.3% and 0.6% respectively.
The Foundations & Endowments segment had a median U.S. equity allocation of 24.6% in the quarter, down 7.5% from the same quarter five years earlier. International equity median exposure was 10.5% and the median exposure to U.S. fixed income was 10.6%. In the F&E universe, private equity and hedge fund median allocations come in at 12.9% and 12.7% respectively as of quarter end.
Results of U.S. plan level universes as of March 31, 2021:
Foundations & Endowments
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 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2021, Northern Trust had assets under custody/administration of US $14.8 trillion, and assets under management of US $1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.
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