Northern Trust Universe Data: Equity Markets Drive Strong Second Quarter Results for Institutional Investors
The Northern Trust Universe tracks the performance of 370 large U.S. institutional investment plans, with a combined asset value of more than $1.4 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.
Investment performance was broadly positive but varied across institutional segments, with the Northern Trust Corporate (ERISA) universe returning 3.2% at the median for the quarter while the Northern Trust Public Funds universe median return was 4.9% and Northern Trust Foundation and Endowment (F&E) universe produced a 5.1% median return.
U.S. equity performance was notably volatile in the second quarter, falling 12% during the first eight days of April, only to stage a remarkable 20% rebound, propelling major indices to record highs by quarter's end. Investor excitement around the rapid advancement of artificial intelligence (AI) proved a key driver of performance, contributing to the strongest quarterly equity returns since the post-pandemic surge in Q2 2020, when the S&P 500 returned over 20%.
John Turney, Global Head of Total Portfolio Solutions, Northern Trust Asset Servicing, said: 'This quarter's results showcase the resilience of diversified portfolios and the steadfast confidence of institutional investors, even amid shifting economic headwinds. As innovation and adaptability continue to shape global markets, our clients are well-positioned to seize emerging opportunities while managing risk.'
U.S. fixed income produced positive returns as well, with the Northern Trust U.S. Fixed Income program universe median return at 1.3% for the quarter. Inflation remained contained, and the U.S. Federal Reserve opted to hold rates steady for the quarter. Yields on short-term bonds declined as the market priced in a delay to anticipated rate cuts. The European Central Bank lowered interest rates by 25 basis points in June, aiding strong returns overseas.
The ERISA plan one, three, and five-year median returns were 7.8%, 5.4%, and 3.7%, respectively. In the Northern Trust ERISA plan universe, the median allocation to U.S. Fixed Income was 54.1%, as plans look to invest in bonds to match their investments with future benefit payment obligations. This large fixed-income allocation usually leads to less volatile returns compared to other plan sponsor types.
The Public Funds universe median returns for the one, three, and five-year periods stand at 10.1%, 8.2% and 8.8%, respectively. These funds often invest a substantial portion of their assets in both public and private equity, which tends to introduce higher volatility compared to ERISA plans. Notably, the median allocation to Domestic Equity is 26.9% and 12% for International Equity.
In the Foundations & Endowments universe, median one, three, and five-year returns were 10.2%, 9.8% and 10%, respectively. Foundations and Endowments frequently utilize limited partnerships (LPs) for their investments in private equity, private credit, infrastructure, and real estate. Due to the delayed reporting of valuations by LPs, these plans tend to underperform in the short term during strong market conditions, as the investment managers' lagging valuations impact the plans' returns.
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 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2025, Northern Trust had assets under custody/administration of US$18.1 trillion, and assets under management of US$1.7 trillion. For more than 135 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Instagram @northerntrustcompany or Northern Trust on LinkedIn.
https://www.northerntrust.com/terms-and-conditions.
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