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Northern Trust Universe Data: 2019 Investment Returns Reach a 10-Year High for Institutional Investors

CHICAGO – Investment returns in 2019 soared to a 10-year high for institutional investors, according to Northern Trust Universe data released today. The median plan in the Northern Trust Universe finished with an 18.2% return for the year and a 4.9% return for the three months ending December 31, 2019.

The Northern Trust Universe tracks the performance of approximately 300 large U.S. institutional investment plans, with a combined asset value of approximately $1.13 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

“Strong fourth quarter performance in the U.S. and international equity markets drove stellar performance for both the quarter and the year,” said Mark Bovier, regional head of Investment Risk and Analytical Services at Northern Trust. “U.S. equity programs, the largest allocation in most plans in the Northern Trust Universe, had a median return of 8.9% in the quarter, while the median return for international equity programs was 9.2%. Meanwhile the U.S. fixed income program universe median return was up 0.6% for the quarter. The 10-year Treasury Note yield rose from 1.7% to 1.9% during the quarter. However, short-term maturities, which are closely tied to monetary policy expectations, continued to fall putting upward pressure of bond prices.”

Of the three institutional segments tracked by Northern Trust, Corporate ERISA pension plans reported the lowest median return for the quarter at 3.4%, yet still garnered the highest one-year returns at 20.6%. Public Funds had a quarterly median return of 5.2% and a yearly median return of 18.2%, and Foundations and Endowments produced a 4.9% median return in the fourth quarter and a 16.2% return in 2019.

ERISA plans benefited from a significant exposure to both equity and fixed income throughout 2019, given that bonds boosted returns earlier in the year but were weak through the final quarter. Thanks to their allocations, ERISA plans brought in 2.4% higher returns than Public Funds and 4.4% higher returns than Foundations and Endowment over the 12-month period.

The median U.S. equity allocation for ERISA plans in the fourth quarter was 28.2% and international equity median exposure was 9%. U.S. fixed income exposure ended the period at 36.9%, the largest allocation to bonds of any segment. While U.S. equity exposure remains significant for the universe it is down from 36.5% five years prior.

Public Fund plan median U.S. equity allocation for the fourth quarter was 34.2%. International equity median exposure was 15.5% and the median exposure to U.S. fixed income came in at 24.7%. The year-end equity exposure is consistent with those five years earlier, however U.S. fixed income exposures have fallen over 4% as investors have reallocated to alternative asset classes.

Foundation and Endowment plans had a median U.S. equity allocation of 28.6% in the fourth quarter. International equity median exposure was 9.5% and the median exposure to U.S. fixed income was 10.9%. Alternative assets are widely used in the F&E universe with private equity and hedge fund median allocations at 15% and 11.6% as of December 31, 2019.

Results of U.S. plan level universes as of December 31, 2019:

 4th Qtr1 Yr3 Yr5 Yr
ERISA3.4%20.6%9.7%7.2%
Public Funds5.2%18.2%9.8%7.3%
Foundations & Endowments4.9%16.2%9.2%6.8%

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 21 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2019, Northern Trust had assets under custody/administration of US $12.1 trillion, and assets under management of US $1.2 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.

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/united-states/terms-and-conditions.