Northern Trust Universe Data: Surging Inflation Brought Volatility Back to the Market in the First Quarter

Volatility returned to the markets during the first quarter of 2022, driven by inflation hitting a 40-year high, the U.S. Federal Reserve announcing interest rate hikes and Russia invading Ukraine. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was -4.4% for the quarter ending March 31, 2022, as global equity markets sold off during the quarter and bonds prices fell.

The Northern Trust Universe tracks the performance of 376 large U.S. institutional investment plans, with a combined asset value of more than $1.3 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

The Northern Trust Corporate (ERISA) universe median return for the quarter was -6.9%. The Northern Trust Foundation and Endowment (F&E) universe produced a -4.0% median return for the quarter while the Northern Trust Public Funds universe median returned -3.4% in the quarter.

“Geopolitical concerns related to Russia’s invasion of Ukraine weighed heavily on international markets during the first quarter,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “Commodity prices such as oil, natural gas, wheat and corn soared as concerns related to supply chain disruptions became a focal point for investors. The strengthening of the U.S. dollar contributed to the decline of returns for U.S. investors overseas and was most pronounced for emerging markets.”

The Northern Trust U.S. equity program universe median return fell 6.0% for the quarter. The S&P 500 large cap index was down 4.6% for the three-month period. Large cap stocks continued to outperform small cap stocks. The Russell 1000 large cap index returned -5.1% compared to the Russell 2000 small cap index which returned -7.5% for the period.

The ERISA plan median one-, three- and five-years returns were 1.6%, 8.7% and 7.9% respectively. The U.S. fixed income asset class remains the largest ERISA plans allocation at a median allocation of 45.7% and grew during the period because of lower equity valuations. The median allocation for U.S. equity was 23.2%.

The Northern Trust Public Funds universe median multi-period returns for the one-, three- and five-year periods stand at 6.9%, 10.1% and 9.1% respectively. The median first quarter allocations to U.S. and international equity are 31.0% and 14.6% respectively, both declining because of the global equity market sell off. The median exposure to U.S. fixed income for Public Funds rose 1.2% to 21.2%, compared to the fourth quarter of 2021.

The Northern Trust Foundations & Endowments universe plan’s median one-, three- and five-years returns were 7.6%, 11.7% and 9.9% respectively. The Foundation and Endowment plan’s median U.S. equity allocation dropped to 20.8% during the quarter. The median allocation to private equity was 20.3% while the median allocation to U.S. fixed income continued to stay below 10%.

Results of U.S. plan level universes as of March 31, 2022:

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 22 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2022, Northern Trust had assets under custody/administration of US$15.5 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. Please visit our website or follow us on Twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.

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