May 18, 2016

First Quarter Pension Returns Stay Positive as Real Estate Continues to Outperform, according to BNY Mellon U.S. Master Trust Universe

Eighty-three percent of plans post gains in Q1-16, but median one-year return down -1.52%


NEW YORK, May 18, 2016 — The median return of the BNY Mellon U.S. Master Trust Universe, a fund-level tracking service, was +1.17% for the first quarter of 2016, marking the second straight quarter of positive results. The one-year return of -1.52% was below the Universe’s five-year annualized return of +6.35% and marked the third straight quarter of negative twelve-month performance.

With a market value of more than $1.8 trillion and an average plan size of $5.4 billion, the BNY Mellon U.S. Master Trust Universe is a fund-level tracking service that can be used to make peer comparisons of both performance and asset allocation results. The Universe consists of 525 corporate, foundation, endowment, public, Taft-Hartley, and health care plans.

“Corporate pension funds outperformed all plan types in Q1, gaining +2.19% as they benefited from a higher allocation to U.S. fixed income,” said Frances Barney, CFA, head of Consulting-Americas for Global Risk Solutions at BNY Mellon. “The difference between corporates and endowments, the lowest performing group, was 206 basis points. All asset classes posted positive results in Q1 except for non-U.S. equity.

“Real estate again was the only asset class with double-digit gains over the one-year period (+11.97%), continuing its run of more than six years of positive quarterly results,” she added.

Q1 Highlights

  • 82% of plans posted positive results during the quarter;
  • Corporate pension plans saw the highest median return (+2.19%), followed by public plans (+1.22%);
  • U.S. equities posted a quarterly median return of +0.83%, versus the Russell 3000 Index return of +0.97%. Non-U.S. equities saw a median return of -0.41%, compared to the Russell Developed ex U.S. Large Cap Index result of -1.73%. U.S. fixed income had a median return of +3.01%, versus the Barclays Capital U.S. Aggregate Bond Index return of +3.03%. Non-U.S. fixed income had a median return of +5.55%, versus the Citigroup Non-U.S. World Government Bond Index return of +9.10%. Real estate had a median return of +2.39%, versus the NCREIF Property Index result of +2.21%.

The average asset allocation in the BNY Mellon U.S. Master Trust Universe for the first quarter was: U.S. equity 25%, U.S. fixed income 25%, non-U.S. equity 17%, non-U.S. fixed income 2%, real estate 5%, cash 1%, and alternatives/other 25%.

BNY Mellon's Asset Servicing business supports institutional investors in today's fast-evolving markets, safeguarding assets and enhancing the management and administration of client investments through services that process, monitor and measure data from around the world. We leverage our global footprint and local expertise to deliver insight and solutions across every stage of the investment lifecycle.

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of March 31, 2016, BNY Mellon had $29.1 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Learn more at http://www.bnymellon.com/. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

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Russell 3000 Index and Russell Developed ex US Large Cap Index:  Russell Investment Group ("Russell") is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto.  The Russell Index data may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. Barclays Capital U.S. Aggregate Bond Index: © Barclays Bank PLC 2016.  This data is provided by Barclays Bank PLC all rights are reserved. Citigroup Non-US World Government Bond Index: © Citigroup Global Markets Inc., 2016. All rights reserved.

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