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Northern Trust Universe Data: Fourth Quarter Losses Drag Institutional Plan Sponsors to Negative Returns in 2018


Institutional plan sponsors lost 3.8 percent at the median in 2018, as fourth-quarter losses dragged down returns for the year, according to Northern Trust Universe data released today. The Northern Trust Universe tracks the performance of approximately 300 large U.S. institutional investment plans, with a combined asset value of approximately $925.7 billion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

The median plan in the Northern Trust Universe lost 6.6 percent in the quarter ending December 31, 2018. U.S. equities turned sharply negative in the quarter, with the median U.S. equity program in the Universe losing almost 15 percent in the period. The fourth-quarter wiped out gains of 3.3 percent at the median through the third quarter and resulted in the worst calendar year performance for plans in the Universe since a nearly 25 percent loss in 2008 during the Global Financial Crisis.

“Institutional plan sponsors benefited from a long run of positive performance by U.S. equities since the financial crisis ended in the second quarter of 2009, but equity markets have been significantly more volatile in the past year,” said Mark Bovier, regional head of Investment Risk and Analytical Services at Northern Trust. “U.S. equities were the driver of fourth-quarter losses and had a significant impact on long-term investment results as well. For plans in the Northern Trust Universe, the median annualized return since the end of the financial crisis dropped 100 basis points – from 10.8 percent as of September 30, 2018 to 9.8 percent as of December 31, 2018 – due to fourth quarter performance.”

Corporate ERISA plans had the best relative performance in the fourth quarter, losing 5.5 percent at the median, while the median plan in the Foundation & Endowment segment lost 6.3 percent and the median Public Fund plan lost 7.3 percent in the quarter.

“Fixed income was something of a safe harbor in the fourth quarter, and Corporate ERISA plans benefited from larger allocations to bonds,” said Bill Frieske, senior investment performance consultant, Investment Risk and Analytical Services. “Weak results from hedge funds and domestic equities weighed on returns for Foundation & Endowment plans. Public Funds had the weakest results in the fourth quarter because they have the largest allocation to equities of any segment.”

The median total fixed income program in the Northern Trust Universe was up 0.6 percent in the fourth quarter. Alternative asset classes were a mixed bag: the median private equity program gained 3.0 percent in the quarter while the median hedge fund program lost approximately 5 percent, and the median real estate program was up slightly, 0.3 percent. The median total equity program – U.S. and international – lost 13.2 percent in the quarter.

Longer-term returns as of December 31, 2018 are:

1 Yr


3 Yr


5 yr

ERISA -4.8% 6.0% 5.0%
Public Funds -4.0% 6.2% 5.1%
Foundations & Endowments -2.6% 6.0% 4.9%

About Northern Trust

Northern Trust Corporation (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 20 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, 2018, Northern Trust had assets under custody/administration of US$10.1 trillion, and assets under management of US$1.1 trillion. For more than 125 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 http://www.northerntrust.com/disclosures.

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