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Fourth Quarter Pension Returns Back in the Black as Real Estate Continues to Outperform, according to BNY Mellon U.S. Master Trust Universe

Ninety-seven percent of plans post gains in Q4-15, but median one-year return down -0.29% 

The median return of the BNY Mellon U.S. Master Trust Universe, a fund-level tracking service, was +2.24% for the fourth quarter of 2015, the first quarter of positive performance following two quarters in the red. The one-year return of -0.29% was below the Universe's five-year annualized return of +6.85%, marking the second straight quarter of negative twelve-month performance.

With a market value of more than $1.69 trillion and an average plan size of $5.0 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 560 corporate, foundation, endowment, public, Taft-Hartley, and health care plans.

"While 2016 has been a tough ride for the markets, public plans returned 2.58% in Q4-15, benefiting from higher allocations to non-U.S. equity and outperforming all other plan types. Public and Taft-Hartley plans were the only ones to see positive returns for all of 2015," said Frances Barney, head of Consulting-Americas for Global Risk Solutions at BNY Mellon. "Looking at asset classes, all segments posted positive results in Q4 except for U.S. fixed income. Real estate again was the only asset class with double-digit gains over the one-year period (+12.83%), continuing its run of over five years of positive quarterly results."

Q4 Highlights

  • 97% of plans posted positive results during the quarter;
  • Public plans saw the highest median return (2.58%), followed by Taft-Hartley plans (2.50%);
  • U.S. equities posted a quarterly median return of +5.72%, versus the Russell 3000 Index return of +6.27%. Non-U.S. equities saw a median return of +3.67%, compared the Russell Developed ex U.S. Large Cap Index result of +4.00%. U.S. fixed income had a median return of -0.49%, versus the Barclays Capital U.S. Aggregate Bond Index return of -0.57%. Non-U.S. fixed income had a median return of +0.24%, versus the Citigroup Non-U.S. World Government Bond Index return of -1.38%. Real estate had a median return of +2.76%, versus the NCREIF Property Index result of +2.91%. 

The average asset allocation in the BNY Mellon U.S. Master Trust Universe for the fourth quarter was: U.S. equity 26%, U.S. fixed income 26%, non-U.S. equity 17%, non-U.S. fixed income 2%, real estate 5%, cash 1%, and alternatives/other 23%.

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 Dec. 31, 2015, BNY Mellon had $28.9 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). 

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 2015.  This data is provided by Barclays Bank PLC all rights are reserved. Citigroup Non-US World Government Bond Index: © Citigroup Global Markets Inc., 2015.