U.S. Equities Boost Institutional Investor Returns in Q2 2018

Institutional assets tracked by Wilshire Trust Universe Comparison Service (Wilshire TUCS) posted an all-plan median return of 0.88% for second quarter and 7.50% for the year ending June 30.

Second quarter rebounded slightly from last quarter, which posted negative median returns for all plans for the first time in nearly three years.

Public funds posted the best quarterly and one-year returns, 1.34% and 8.55%, respectively, of all plan types, while corporate funds posted the lowest, 0.42% and 5.52%, respectively. Foundations and endowments posted quarterly and one-year returns of 1.06% and 7.71%, respectively. Returns for Taft Hartley defined benefit (DB) plans were 0.72% and 7.96%, respectively, and for Taft Hartley health and welfare funds were 1.23% and 5.98%, respectively.

“Exposure to U.S equities clearly helped fuel plan performance second quarter,” says Jason Schwarz, president, Wilshire Analytics and Wilshire Funds Management.  “The recent mix of positive economic indicators and generally strong earnings results has helped drive equity returns higher.”

U.S. equities, represented by the Wilshire 5000 Total Market Index, gained 3.83% second quarter and posted a 14.66% gain for the June 30 one-year. Meanwhile, international equities, represented by the MSCI AC World ex U.S., fell -2.61% second quarter with a net gain of 7.28% for the year. U.S. bonds, as represented by the Wilshire Bond Index, also fell second quarter, posting -0.25% and -0.59% for the quarter and year, respectively.

Quarterly median returns across plan types ranged from 0.26% to 1.56% for large corporate funds (assets greater than $1 billion) and large foundations and endowments (assets greater than $500 million), respectively. One-year returns spanned low and high medians from the same, ranging from 4.64% to 10.03% for large corporate funds and large foundations and endowments, respectively.

“The 60/40 portfolio outperformed all plan types, posting a 2.20% gain for the quarter,” says Schwarz. “While all plans types fell short of the quarter’s 1.8% target needed for a 7.5% annual return, medians were positive across the board due mostly to U.S. equity exposure.”