Northern Trust Universe Data: Strong Q3 for U.S. Institutional Investors as Global Markets Continue 2024 Gains

Global equity and fixed income markets had strong performance in the third quarter, lifting U.S. institutional plan gains across segments. The Northern Trust All Funds Over $100 Million plan universe achieved a median return of 4.7% for the quarter, placing it in the top quartile of returns over the past decade, while one-year median returns approached 20%.

The Northern Trust Universe tracks the performance of 388 large U.S. institutional investment plans, with a combined asset value of more than $1.4 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

The Northern Trust Corporate (ERISA) universe produced a median return of 6.4% for the quarter, while the Northern Trust Foundation and Endowment (F&E) universe had a median return of 4.2%, and the Northern Trust Public Funds universe posted a median return of 4.5% for the period ending September 30.

“In the third quarter, the Fed's much-anticipated rate cut was finally enacted, and institutional investors grew more optimistic as equity markets climbed, driven by solid corporate earnings and renewed confidence in the economy's growth,” said John Turney, Global Head of Total Portfolio Solutions. “The quarter's strong performance across most sectors has lifted hopes for the future, painting a picture of resilient market strength.”

U.S. equities experienced strong gains in the third quarter, with some indices reaching new highs. The Northern Trust U.S. Equity Program universe produced a 6.3% median return for the third quarter.

Despite the “Magnificent Seven” leading the U.S. equity market's 18-month rally, mid and small-cap stocks outperformed in the third quarter. The Russell 1000 Large Cap Index increased by 6.1%, while the Russell 2000 Small Cap Index rose by 9.3% during the same period, highlighting the stronger performance of small cap stocks over large cap stocks.

Strong returns in the fixed income markets were fueled by actions taken by the Federal Reserve and the European Central Bank to ease monetary policy by cutting interest rates. The Northern Trust U.S. Fixed Income program universe median return was 5.0% for the quarter. The U.S. Ten-Year Government Bond yield fell from 4.47% to 3.73% during the quarter and the U.S. Two-Year Government Bond yield fell 66 basis points to 3.93%.

The ERISA Plan one, three, and five-year median returns were 18.1%, -0.2%, and 4.3%, respectively. The ERISA Plans’ heavy allocation to public equity and fixed income contributed to the outperformance for the quarter relative to other plan segments.

The Public Funds universe median returns for the one, three, and five-year periods stand at 16.7%, 4.6% and 8.1%, respectively. The median quarter allocation to U.S. and International Equity are 27.6% and 12.5%, respectively. The median exposure to U.S. Fixed Income for Public Funds is 22.3%. Strong performance in public market holdings has led to a slight reduction in the median allocation for Private Equity, from 13.7% to 13.0%.

The Foundations & Endowments median one, three, and five-year returns were 17.2%, 4.4% and 9.1%, respectively. The median allocation to private equity is 21.0%, while the median allocation to hedge funds is 8.3%.

Results as of September 30, 2024:

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 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2024, Northern Trust had assets under custody/administration of US$17.4 trillion, and assets under management of US$1.6 trillion. For more than 135 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 X (formerly 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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