Equity markets post gains for third quarter of 2009, Mercer reports

New York, November 9, 2009
Mercer’s third-quarter 2009 Defined Contribution Universe Summary found gains in all equity markets during the period. The quarterly report analyzes returns of various funds and helps institutional investors evaluate their mutual fund managers’ performance against other funds and asset class benchmarks.

The S&P 500® Index gained 15.6 percent during the quarter while the Barclays Capital Aggregate Bond Index posted a gain of 3.7. Money market instruments had a zero return, as measured by the three-month T-bill rate. The balanced asset class, using a benchmark of 60 percent S&P 500/40 percent Barclays Capital Aggregate Bond Indices, posted a gain of 10.8 percent. International equity markets, as measured by the MSCI EAFE® Index, gained 19.5 percent during the third quarter.

The international equity asset class outperformed US equities for the quarter by 390 basis points. Global equities gained 17.4 percent for the quarter and underperformed international equities by 210 basis points.

Over a 10-year time frame, the S&P 500 Index lost 0.2 percent, while the Russell 2000® Index gained 4.9 percent. International equity markets gained 2.6 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 6.3 percent, significantly above US equity returns (as measured by the S&P 500 Index) over the same time period.

Mutual fund performance
During the third quarter, value funds outperformed growth funds, as the median large cap value fund posted a gain of 16.3 percent compared to a gain of 13.8 percent for the median large cap growth fund. The small cap segment of the market trended in the same direction as large cap stocks, as the median small cap value fund outperformed the median small cap growth fund by 430 basis points.
The median large cap fund underperformed the S&P 500 Index by 60 basis points for the third quarter. Small cap funds outperformed their large cap counterparts for the quarter, as the median small cap fund gained 18.2 percent for the quarter versus a gain of 15.0 percent for the median large cap fund.

Within the international equity asset class, the median manager underperformed the MSCI EAFE Index by 80 basis points during the quarter. The median emerging markets manager gained 21.5 percent for the quarter and slightly outperformed the MSCI Emerging Markets Free Index by 50 basis points.

The median core fixed income fund outperformed the Barclays Capital Aggregate index for the third quarter by 140 basis points.

About the survey
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: All performance is measured in US dollars, after investment management fees are deducted.

About Mercer
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 18,000 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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