Northern Trust Universe Data: Global Equity Markets Drive Positive Results in Second Quarter as Inflation Cools

Global equity markets posted positive gains during the second quarter of 2023 due to cooling inflation, the GDP on track to grow 2% in the current year and renewed optimism in the technology sector. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was up 2.3% for the quarter ending June 30, 2023.

The Northern Trust Universe tracks the performance of more than 400 large U.S. institutional investment plans, with a combined asset value of more than $1.28 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

The Northern Trust Corporate (ERISA) universe median return was 0.8% for the quarter, trailing the Northern Trust Public Funds universe, where the median plan was up 2.3% for the quarter, and the Northern Trust Foundation and Endowment (F&E) universe, which produced a 2.6% median return for the quarter.

“The Federal Reserve increased the Fed Funds rate by 25 basis points during the quarter and commented that future rates increases would be on the low end of investor expectations. This fueled optimism that inflation is receding,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “This, combined with continued U.S. GDP growth and global optimism in the technology sector resulting from advancements in artificial intelligence, allowed equity markets to post strong results for the quarter.”

The Northern Trust U.S. Equity Program universe generated a 7.6% median return for the second quarter. Large cap stocks continued to outperform small cap stocks in the quarter, with the Russell 1000 large cap index up 8.6% compared to the Russell 2000 small cap index, which returned 5.2% for the quarter.

The Northern Trust U.S. Fixed Income program universe median return was down -0.5% for the quarter. Negative results were driven by an increase in interest rates, with the U.S. 10-year treasury bond yield rising from 3.48% to 3.81%, and continued rising interest rates in developed markets, most notably in the UK and Australia, which experienced high inflation during the quarter.

ERISA plan universe median one-, three- and five-years returns were 3.6%, 1.9% and 4.4% respectively. The U.S. fixed income asset class remains the largest holding in ERISA plans, with a median allocation of 52.8%, putting pressure on the segment returns relative to peers in the Public Funds and F&E segments, where U.S. Fixed Income segment allocations are 22% and 8% respectively.

Public Funds universe median multi-period returns for the one-, three- and five-year periods stand at 6.6%, 8.1% and 6.1% respectively. The median second quarter allocations to U.S. and international equity were 28.6% and 12.3% respectively. The median exposure to US fixed income for Public Funds decreased to 21.5%.

Foundations & Endowments universe median one-, three- and five-years returns were 7.3%, 9.4% and 7.1% respectively. The median U.S. equity allocation for the F&E universe increased to 19.2% during the quarter. The median allocation to private equity was 24.1%, while the median allocation to US fixed income fell to 8.3%.

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 25 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2023, Northern Trust had assets under custody/administration of US$14.5 trillion, and assets under management of US$1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Twitter @NorthernTrust or Northern Trust Corporation on LinkedIn.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.

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