U.S. corporate plans outperform public funds in Q2
Significant exposure to equities driving returns.
BY Caroline Cakebread | August 12, 2014
According to data from Northern Trust, U.S. pension plans clocked positive returns in Q2 2014, lead by gains in corporate ERISA plans which returned 4% while public pension funds returned 3.9%. Foundations and endowments meanwhile gained 3.5% on average. The growth can be attributed to equity and bond markets which have benefited from strong earnings growth and low interest rates according to Bill Frieske, senior performance consultant, Northern Trust Investment Risk and Analytical Services.
Equities feature heavily in the asset mix of U.S. plans in the Northern Trust study. Here’s how it breaks down according to the survey:
- Public Funds were weighted towards U.S. equity (32.6 percent) and international equity (22.9 percent)
- Foundations & Endowments were weighted towards private equity (23.1 percent) and U.S. equity (19.9 percent)
- Corporate ERISA plans were weighted towards U.S. fixed income (37.8 percent) and U.S. equity (29.3 percent)
According to Northern Trust, corporate plans got a boost from a combined 42 percent allocation to both international and U.S. equity markets. A similar focus on equities can be seen in public funds. However, foundations and endowments, with their weighting towards alternatives, had a slightly less positive quarter.