DB Plans See Best Year-to-Date Q3 Performance Since 2019

Defined benefit plans in the in the U.S. have seen their best year-to-date performance since 2019, according to the “Q3 2025 Confluence Plan Universe Report,” an analytical tool for plan sponsors which tracks the investment performance of institutional funds, including corporate and public pensions; endowments and foundations; and Taft-Hartley plans.

In the third quarter, Confluence Technologies Inc.’s defined benefit plan sponsor universe saw a median 4.43% return, underperforming a 60/40 benchmark of 5.43%, with median year-to-date performance of 10.72%, 40 basis points higher than at the same point in 2024.

Growth was primarily driven by strong equity markets fueled by the artificial intelligence boom and growth stocks, as well as growth in emerging markets’ equity because of a weaker dollar. The Russell 1000 Index has risen 10.5% YTD through Q3, with the MSCI Emerging Markets Index returning 13.6% during the period.

In fixed-income markets, the U.S. Bloomberg Aggregate Index returned 2.03% during Q3, with the Bloomberg U.S. Long Treasury Index returning 2.49%.

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Public pension funds had the strongest growth in Q3, returning a median 4.78%, due to higher allocations to equities and lower fixed-income allocations. Corporate pension plans, on the other hand, with most of their assets invested in fixed income (61.5%), had the weakest performance in Q3, with a median 4.04% return.

The report also found that, year-to-date, public pension plans and Taft-Hartley plans reduced alternative investment holdings by more than 0.75% and by more than 1%, respectively. Endowments and foundations, which had the highest allocations to alternatives at 10.9%, increased their allocations by more than 0.25%, and corporate plans increased their allocations by 0.25%.

Corporate pension plans increased their allocations to U.S. fixed income by nearly 3% year-to-date, while all other investors increased their U.S. fixed-income investments by less than 1%.

So far in 2025, corporate plans and endowments and foundations have increased their U.S. equity allocations by more than 1.5%, while Taft-Hartley plans have increased these investments by 2%. Public pension plans reduced their U.S. equity allocations by 0.5% year-to-date.