US Investors Positive in Q1: Northern Trust
Posted by Colin Lambert. Last updated: May 8, 2023
Data from Northern Trust reveals that thanks to global financial markets posting positive results during the first quarter of 2023, US funds have had a good start to 2023.
The bank says driven by diminishing concerns regarding a potential recession, the reopening of China’s economy and falling energy costs the median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was 4.1% for the quarter.
The Northern Trust Universe tracks the performance of more than 400 large US institutional investment plans, with a combined asset value of more than $1.3 trillion, and which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.
The corporate (ERISA) universe median return for the quarter was 5.0%. The public funds universe median returned 3.5% while the foundation and endowment (F&E) universe produced a 3.4% median return for the quarter.
“The Federal Reserve increased the Fed Funds rate twice during the quarter, at a reduced rate of 25 basis points relative to increases during last year,” observes Amy Garrigues, global head of investment risk and analytical services at Northern Trust. “This led to renewed investor optimism that inflation may be receding. This, combined with China’s reopening and falling energy prices, allowed global markets to post positive results for the quarter.”
The Northern Trust US equity program universe generated a 7.3% median return for the first quarter, while bond yields fell during the quarter, leading to positive returns for the fixed income asset class. The US Fixed Income program universe median return was 3.1% for the quarter.
Northern Trust says public funds universe median multi-period returns for the one-, three- and five-year periods stand at -3.6%, 11.1% and 5.7% respectively. The median first quarter allocations to US and international equity were 28.3% and 12.7% respectively, contributing to the fifth-best quarterly result for the public funds universe over the last 10 years.
F&E universe median one-, three- and five-years returns were -4.3%, 11.9% and 6.6% respectively. The median US equity allocation for the F&E universe remained at 17.5% during the quarter, while the median allocation to private equity was 22.1% while the median allocation to US fixed income dropped to below 9%.