Northern Trust Universe Data: Market Momentum Stalls as Inflation Concerns Persist in Q2

Global equity market returns were subdued in the second quarter of 2024, a departure from the strong results observed in the first quarter, as global inflation remained a key area of concern. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was 1.1% for the quarter ending June 30, 2024.

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 Foundation and Endowment (F&E) universe produced a 1.3% median return in the second quarter, while the Northern Trust Public Funds universe median return was up 1.2% and the Northern Trust Corporate (ERISA) universe median return was flat, up only 0.01%.

"Institutional investors benefited from the equity market rally in the first half of the year, ahead of fiscal year-end for many plans on June 30," said John Turney, Global Head of Total Portfolio Solutions. "However, as 2024 progresses, it’s clear investors remain focused on inflation as they await further rate cuts from the Fed.”

U.S. equities posted mixed results during the quarter as investors favored growth companies tied to artificial intelligence, while materials and industrials fell due to inflation concerns. The Northern Trust U.S. Equity Program universe produced a 1.9% median return for the second quarter. Large cap stocks outperformed small cap stocks, with the Russell 2000 small cap index returning -3.3%, compared to the Russell 1000 large cap index which was up 3.6% for the period.

The Northern Trust U.S. Fixed Income program universe median return was up 0.3% for the quarter. The yield of the US Ten-Year Government Bond increased from 4.21% to 4.39% over the same period. Within the domestic market, bonds in the U.S. Government, Investment Grade, and High Yield categories posted positive returns, primarily due to declining bond prices.

The end of the second quarter, June 30, marks the conclusion of the fiscal year-end reporting cycle for numerous pension funds, foundations, and endowments within the Northern Trust universes.

Foundations & Endowments universe median one, three- and five-year returns were 10.6%, 3.4% and 8.4%, respectively. The median allocation to private equity was 22.1%, a slight decline from the prior quarter, resulting from strong returns in the equity asset class. The median allocation to hedge funds was 8.7%.

Public Funds universe median returns for the one-, three- and five-year periods stood at 9.3%, 3.1% and 7.1%, respectively. The median allocation to U.S. and international equity were 27.4% and 12.6%, respectively, while the median exposure to U.S. fixed income held steady at 22.4% and strong performance in equities lowered the segment’s median private equity allocation to 13.7%.

ERISA plan universe median one-, three- and five-years returns were 5.0%, -2.1% and 3.7%, respectively. The segment’s large median allocation to the US fixed Income asset class (55.9%) resulted in underperformance relative to other client segments. ERISA clients continue to have small allocations to alternative assets, where the median allocation to private equity is 1.9%.

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 June 30, 2024, Northern Trust had assets under custody/administration of US$16.6 trillion, and assets under management of US$1.5 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 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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