New York, February 19, 2008: The median corporate, public and foundation/endowment plan experienced negative results for the fourth quarter of 2008, finds a quarterly survey of plan sponsor performance by Mercer. Results in 2008 continue to decline as the threat of a US recession and the subprime crises continue to weight on investor’s expectations.
According to Mercer’s Summary Performance of US Institutional Portfolios survey, the median corporate plan had a fourth-quarter loss of 0.7%. Public plans and foundation/ endowment funds lost 0.8% and 0.2% during the quarter, respectively.
On a one-year basis, corporate plans had average gains of 8.1%, while public plans and foundation/endowment plans earned 8.3% and 10.2%, respectively. Over a 10-year timeframe, all three plan types have averaged between 7.7% and 8.6% on an annualized basis.
Equity performance
According to Mercer’s analysis, both value and growth managers produced negative results during the fourth quarter, with the median large cap growth manager outperforming its value-oriented counterparts by 430 basis points. The median core large cap manager outperformed the S&P 500® Index during the fourth quarter by 70 basis points and outperformed the index by 150 basis points on an annualized basis over the last 10 years. The median core large cap manager outperformed its small cap counterpart by 310 basis points over the current quarter. The median core large cap manager lost 2.6% while the median core small cap manager lost 5.7%.
The international equity asset class, as represented by the MSCI EAFE® Index, lost 1.8%, outperforming the S&P 500® Index, its US large cap counterpart, for the quarter by a margin of 150 basis points and outperforming on a one-year basis by 570 basis points. Local stock market returns were negative but a weakening US dollar softened the overall loss..
Within the international asset class, the median growth manager outperformed its value counterpart by 230 basis points.
Fixed income performance
Within the fixed income asset class, the median core fixed income manager underperformed the Lehman Brothers Aggregate™ Index in the fourth quarter by 40 basis points and underperformed the index on a one-year basis by 30 basis points. Over a 10-year period, the median manager has outperformed the index by 20 basis points.
The median core opportunistic manager underperformed the performance of the Lehman Brothers Aggregate™ Index during the quarter by 80 basis points and underperformed the index by 90 basis points on a one-year basis. The median high-yield manager posted a loss of 0.8% for the quarter.
In assessing international fixed income performance, the median non-US and global manager had a quarterly gain of 3.3%. Over a 10-year period, the median managers in both universes outperformed their respective benchmarks.
About the survey
Summary Performance of US Institutional Portfolios is published quarterly by Mercer. The survey is intended to provide marketplace participants with summarized performance data for the most recent quarter and historical periods. However, please note that past performance is not indicative of future results. Summarized information is shown for plan sponsors at the total plan level while manager performance data are provided at the asset class and sub-asset class level. Fund universes are courtesy of Mellon Analytical Solutions and have not been independently verified by Mercer. Manager universes are courtesy of Mercer’s proprietary manager database.
Summary Performance of US Institutional Portfolios may be downloaded free of charge from www.mercer.com. Please note: All performance is measured in US dollars, before investment management fees are deducted.
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 17,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com.
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