US Pensions Return 6.47% for Fiscal 2019, Miss Target

Market volatility, active management worked against all plan types.

Institutional assets tracked by Wilshire Trust Universe Comparison Service saw all-plan median returns of 3.21% and 6.47% for the second quarter and fiscal year ending June 28, respectively, according to investment management firm Wilshire. 

The returns build on the first quarter’s returns of 8.26%, which was the largest quarterly gain since the third quarter of 2009. However, the 6.47% was short of the 7.25% long-term median target set by public pension plans, according to Wilshire Associates.

“For the one year ending in June of 2019, market volatility and active management worked against all plan types,” Jason Schwarz, president of Wilshire Analytics and Wilshire Funds Management, said in a statement.

“Changes in investor and economic sentiment over the past year resulted in unforeseen outcomes for many active managers,” Schwarz said, adding that “in general, deviations from benchmark exposure were challenged, particularly in fixed income, as yields tumbled and pushed the price of US Treasuries materially higher.”

US equities, as represented by the Wilshire 5000 Total Market Index, rose 3.99% for the quarter and 9.09% for the year, while international equities, as measured by the MSCI AC World ex US, gained 2.98% for the quarter and 1.29% for the year. US bonds, represented by the Wilshire Bond Index, gained 3.57% and 9.19%, respectively, for the second quarter and for the year, and multi-asset, represented by the Wilshire Risk Parity – 10% Target Volatility Index, rose 6.20% for the quarter and 12.52% for the year.

Wilshire also said that one-year medians ranged from 5.45% to 8.41% for large foundations and endowments with assets above $500 million to corporate plans with assets above $1 billion, respectively.

For the fiscal year ending June 2019, all plan types underperformed the 60/40 portfolio, which rose 9.13%. Large plans outperformed small for the year across all types except for foundations and endowments due to their greater equity exposure.

Large plans with assets above $1 billion gained 3.27% and 6.92% for the quarter and year ending June 30, respectively, while plans with assets of less than $1 billion underperformed large for both the quarter and year with returns of 3.16% and 6.30%, respectively.

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