Northern Trust Universe Data: Institutional Investors Struggled in Q2 Amid Global Market Declines and Inflation

CHICAGO–(BUSINESS WIRE)–Global markets continued their decline during the second quarter of 2022 due to continued high inflation, interest rates hikes, the rising risk of a recession and ongoing political unrest in Europe. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was -9.1% for the quarter ending June 30, 2022, the worst performing quarter since Q1 2020 and the second worst in the past 10 years.

The Northern Trust Universe tracks the performance of 376 large US institutional investment plans, with a combined asset value of more than $1.3 trillion, which subscribes to performance measurement services as part of Northern Trust’s asset servicing offerings.

“Institutional investors continue to feel the impact of global events as well as inflation in the US economy,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “Rising global food and energy prices, the ongoing war in Ukraine and China’s inability to curb COVID-19 infection rates have all complicated the hopes for an imminent global recovery. In the US, the Federal Reserve accelerated its plan to increase interest rates during the quarter which resulted in a sell-off of stocks from all sectors.”

The Northern Trust US equity program universe median return fell 16.4% for the quarter. The S&P 500 large cap index was down 16.1% during the three-month period. The Fed’s 50 basis point rate increase on May 4 also accelerated selling in the bond market, and the Northern Trust US Fixed Income program universe median return was down -5.0% for the quarter.

The Northern Trust Corporate (ERISA) universe median return for the second quarter was -10.9%, while its one-year return remained in negative territory at -14.6%. The US fixed income asset class remains the largest ERISA plan allocation at a median allocation of 48.7%. It grew 3.0% during the period because of lower equity valuations. The median allocation for US equity was 19.6%.

The Northern Trust Public Funds universe median returned -7.9% in the quarter. As of June 30, the end of the 2022 fiscal year for most US public funds, the median one-year return for plans in the Northern Trust Public Funds universe stood at -7.1%. Public funds have relatively higher equity allocations, with median second quarter allocations to US and international equity at 28.9% and 13.2% respectively. The median exposure to US fixed income for public funds fell from 0.5% to 20.7%.

The Northern Trust Foundation and Endowment (F&E) universe produced at -7.0% median return for the second quarter. The F&E median US equity allocation dropped to 19.1% in Q2 from 20.8% in Q1. The median allocation to private equity was 24.6% while the median allocation to US fixed income remained below 10%.

Results of US plan level universes as of June 30, 2022:

2nd Qtr

1 year

3 years

5 years

ERISA

-10.9%

-14.6%

2.9%

4.8%

Public Funds

-7.9%

-7.1%

5.9%

6.2%

Foundations & Endowments

-7.0%

-6.7%

8.0%

7.5%

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 US states and Washington, DC, and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2022, Northern Trust had assets under custody/administration of US$13.7 trillion, and assets under management of US$1.3 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 USA, incorporated with limited liability in the US Please read our global and regulatory information.

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