Equity Markets Continue To Drive Strong U.S. Trust Plans Results,
According to BNY Mellon Asset Servicing Report
The median plan for the 438 corporate, foundation, endowment, public, Taft-Hartley and healthcare funds that make up BNY Mellon Asset Servicing’s U.S. Master Trust Universe posted a combined 4.44% return for the second quarter, representing the fourth consecutive quarter of positive performance. Of the plans in the universe, 99% showed positive results, with 85% matching or outperforming the universe’s composite benchmark (Russell 3000® Index* 50%, Lehman Brothers® Aggregate 40%, MSCI® All Country World Index ex US 10%) which returned 3.4% for the quarter. The U.S. Master Trust Universe represents a market value of $1.3 trillion with an average plan size of $3.1 billion.
“Equity markets continue to drive returns for plan sponsors in 2007. Buoyed by strong economic news and a flurry of mergers and acquisitions, both domestic and international equities had a strong quarter. Non-U.S. Equity remains the strongest performing asset class and experienced an impressive YTD result of 12.5% and a one-year median return of 30.0%,” said Greg Stewart, first vice president of Global Product Management. “In contrast Fixed Income markets produced significantly inferior returns for the quarter as concerns about the sub-prime market created a flight to quality combined with a rising yield environment.”
Non-U.S. Equities led all asset classes for the quarter with a median return of 8.28%, slightly lagging the MSCI® All Country World Index ex US return of 8.42%. U.S. Equities returned 6.12%, outperforming the Russell 3000® Index return of 5.77%. U.S. Fixed Income generated a median result of -0.59%, versus the Lehman Brothers® Aggregate return of -0.52%. Non-U.S. Fixed Income posted a median result of -0.21%, ahead of the Citigroup® Non-US Dollar World Government Bond Index return of -1.84%.
Endowments were the top performing plan type for the second quarter with a 5.59% median return, followed by foundations, public, corporate, Taft-Hartley, and healthcare.
“Endowments led the charge once again while healthcare trailed and was the only plan type to under-perform the policy during the period. Significantly lower allocation to both U.S. and Non-U.S. Fixed Income amongst Endowments helped explain this strong performance during the quarter. The trend continues over extended time periods, with endowments up 8.8% YTD and almost 20% for the past 12-months. Despite returning 12.1% for the year, healthcare plans trail the policy by almost 300 basis points,” added Stewart.
The average asset allocation in the U.S. Master Trust Universe for the second quarter was: U.S. Equity 38%, U.S. Fixed Income 22%, Non-U.S. Equity 21%, Non-U.S. Fixed Income 1%, Alternative Investments 7%, Real Estate 2%, Cash 1%, and Other (Private Equity, Oil, Gas, etc.) 8%.
BNY Mellon Asset Servicing offers clients worldwide a broad spectrum of specialized asset servicing capabilities, including custody and fund services, securities lending, performance and analytics, and execution services. BNY Mellon Asset Servicing offers clients worldwide a broad spectrum of specialized asset servicing capabilities, including custody and fund services, securities lending, performance and analytics, and execution services. Mellon Analytical Solutions, LLC provides performance and analytics services for $7.8 trillion in assets under measurement. BNY Mellon Asset Servicing provides services through The Bank of New York, Mellon Bank, N.A. and other related companies.
The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and move their financial assets, operating in 37 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services and treasury services through a worldwide client-focused team. It has more than $20 trillion in assets under custody and administration and more than $1 trillion in assets under management. Additional information is available at www.bnymellon.com.
BNY Mellon Asset Servicing’s Trust Universes Median Plan Returns
Period Ending June 30, 2007
| Universe | Number of Participants | 2Q 2007 | One Year | Five Years | Ten Years
|
| Master Trust Total Fund | 438 | 4.44 | 17.21 | 11.46 | 8.53
|
| Corporate Plans | 226 | 4.22 | 16.82 | 11.22 | 8.26
|
| Foundations | 68 | 4.80 | 17.48 | 11.48 | 9.24
|
| Endowments | 62 | 5.59 | 19.31 | 12.67 | 9.07
|
| Public Plans | 51 | 4.54 | 17.89 | 12.17 | 8.65
|
| Taft-Hartley Plans | 14 | 3.95 | 16.40 | 10.98 | -
|
| Healthcare Plans | 17 | 3.22 | 12.12 | 8.43 | 6.68
|
| Universe Benchmark: Russell 3000® Index 50%, Lehman Brothers® Aggregate 40%, MSCI® All Country World Index ex US, 10%) | - | 3.39 | 15.08 | 9.57 | 7.40
|