US investors returns negative in Q3

US - All US institutional investors performed negatively in the third quarter of 2011 with the median public, corporate and multi-employer funds down 8.94%, 7.94% and 9.03% respectively, Wilshire Trust Universe Comparison Service (Wilshire TUCS) results show.

In the year ended 30 September, the median public fund returned 1.31%; corporate fund, 1.98% and Taft Hartley defined benefit plan, multi-employer plans, returned 1.18%.  

All institutional investors including foundations, endowments and welfare funds performed poorly with a median quarterly return of -8.64% and a median annual return of 1.42%

According to Wilshire, the negative returns were due to global equity market crashes, the recent European debt crisis and the previous US debt downgrade.

Wilshire Analytics managing director Robert Waid said: "The overall results across Wilshire TUCS are not surprising given the fact that battered by worries over a worldwide economic slowdown, a headline-grabbing downgrade of United States Treasury debt and the ongoing European debt crisis, the global stock markets took a tumble during the third quarter of 2011 with the Wilshire Global Total Market Index falling -20.66%.

"Here in the US, the stock market fell in all three months of the third quarter, with the Wilshire 5000 Total Market Index returning -15.04% for the three month period.

 Within the public and corporate plan category, the largest funds fared best. Public funds with assets over $5bn returned 2.38% for the year while corporate funds with assets over $1bn returned 3.21%.

Waid said: "Typically, much of the large plan effect can be explained by asset allocation differences between plan sizes. However, drilling down to the asset class level continues to reveal that large plans delivered superior returns in all of the major asset classes."

In the third quarter, public funds with over $5bn in assets allocated 51.19% to equities; 24.66% to bonds; 3% to real estate, 13.15% allocation to alternative investment; 3.49% to cash and 0.01% to convertibles.

Corporate funds with more than $1bn in assets invested 45.99% in equities; 36.74% in bonds; 1.25% in real estate; 6.72% in alternatives and 3.92% investment in cash.