Northern Trust Universe Data: Institutional Investors Struggle in Q2 Amid Global Market Decline and Inflation

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

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

“Institutional investors continue to feel the impact of global events as well as inflation on 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 failure to reduce COVID-19 infection rates have all complicated hopes of an imminent global recovery. . In the United States, the Federal Reserve accelerated its plan to raise interest rates during the quarter, leading to a sell-off in stocks across all sectors.

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

The Northern Trust Corporate Universe (ERISA) median return for the second quarter was -10.9%, while its one-year return remained in negative territory at -14.6%. The US bond asset class remains the largest allocation in the ERISA plan with a median allocation of 48.7%. It rose 3.0% during the period due to falling stock valuations. The median allocation to US equities was 19.6%.

The median of the Northern Trust Public Funds universe returned -7.9% during 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 was -7.1%. Public funds have relatively higher equity allocations, with second quarter median allocations to US and international equities at 28.9% and 13.2% respectively. Median exposure to US fixed income securities for public funds decreased 0.5% to 20.7%.

The Northern Trust Foundation and Endowment (F&E) universe produced a median return of -7.0% in the second quarter. The median US equity allocation to M&E fell to 19.1% in the second quarter from 20.8% in the first quarter. The median allocation to private equity was 24.6%, while the median allocation to US fixed income remained below 10%.

Universe results at US plan level as of June 30, 2022:

2nd trimester

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 services to businesses, 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 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 over 130 years, Northern Trust has distinguished itself as an industry leader for its exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.

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