Rebounding global markets were friends to U.S. institutional investors in this year’s first quarter, with a median return of 4.1%, according to data tracked in the Northern Trust Universe.
As opposed to last year, when both stocks and bonds plunged and allocator portfolios tumbled 12.7%, the institutions benefited from macro developments to open this year. Less concern about a possible recession ahead, combined with falling energy costs and the economic reopening of China, fueled advances for the top 400 plans (with assets greater than $100 million) that Northern Trust tracks.
The Federal Reserve’s push to hike interest rates and temper inflation was another factor in the improvement. “This led to renewed investor optimism that inflation may be receding,” said Amy Garrigues, global head of investment risk and analytical services at Northern Trust.
The ongoing market recovery actually began in October 2022 and propelled asset owners to a positive Q4 2022, jumping 4.9%. The previous 2022 quarters were deep in the red.
For this year’s Q1, equities climbed 7.1% and bonds 3.1%, a welcome turnaround from the debacle that both asset classes endured for much of 2022.
Among the segments of institutional investors, corporate DB plans did the best, logging a 5.0% return for the quarter. Public pension funds were up 3.5%, and foundations and endowments rose 3.4%.