The S&P 500® Index lost 3.3 percent. The fixed income asset class turned in a positive quarter, with the Lehman Aggregate Bond Index posting a 3.0 percent gain. Money market instruments rose 1.0 percent, as measured by the three-month T-bill rate. The balanced asset class, using a benchmark of 60 percent S&P 500 /40 percent Lehman Aggregate Bond Indices, posted a loss of 0.8 percent. International equity markets, as measured by the MSCI EAFE® Index, lost 1.8 percent during the fourth quarter.
The international equity asset class outperformed US equities for the quarter by 150 basis points. Global equities lost 2.4 percent for the quarter and underperformed international equities by 60 basis points.
Capital market returns remained positive over the long term. Over a 10-year time frame, the S&P 500 Index returned 5.9 percent, while the Russell 2000® Index returned 7.1 percent. International equity markets produced a gain of 8.7 percent over a 10-year time frame, outperforming their US counterparts. Over a 10-year period, the fixed income asset class produced a return of 6.0 percent, slightly above US equity returns (as measured by the S&P 500 Index) over the same time period.
During the fourth quarter, growth funds outperformed value funds, as the median large cap growth fund posted a loss of 0.5 percent compared to a loss of 4.7 percent for the median large cap value fund. The small cap segment of the market trended in the same direction as large cap stocks, as the median small cap growth fund outperformed the median small cap value fund by 310 basis points.
The median large cap fund outperformed the S&P 500 Index by 70 basis points for the fourth quarter. Small cap funds underperformed their large cap counterparts for the quarter, as the median small cap fund lost 5.4 percent for the quarter versus a loss of 2.6 percent for the median large cap fund.
Within the international equity asset class, the median manager slightly outperformed the MSCI EAFE Index by 10 basis points during the quarter. The median emerging markets manager gained 3.4 percent for the quarter but underperformed the MSCI Emerging Market Free Index by 30 basis points.
The median core fixed income fund underperformed the Lehman Brothers Aggregate index for the fourth quarter by 70 basis points.
The Defined Contribution Universe Summary 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. Fund performance data are provided at the asset class and sub-asset class level. Fund universes are courtesy of Manager Performance Analytics (MPA), Mercer’s proprietary manager database, using return data from Morningstar®, Inc.
The Defined Contribution Universe Summary may be downloaded free of charge from www.mercer.com. Please note: Allperformance is measured in US dollars, after 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.