Corporate pension plan sponsors posted a median 4% return in the second quarter, thanks in part to their U.S. equity allocations.

Northern Trust said that corporate pension plans performed the best among all plans – with a 4% investment return at the median – for the quarter that ended June 30. “Plan sponsors have benefited enormously from a huge run up in U.S. equities,” says Bill Frieske, senior performance consultant in Northern Trust’s investment risk and analytical services.

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And over the past five years, retirement plan sponsors that have upped their publicly traded market investments, rather than jumped on the alternative investment bandwagon, have reaped the rewards of this decision. Frieske tells EBN that publicly traded investments have simply made a more “compelling argument” than alternatives in this timeframe.

For corporate retirement plans, the typical asset allocation was around 37.8% to fixed income and 29.3% to U.S. equity. Meanwhile, company retirement advisers are continuing to eye fixed income as low interest rates continue.  

“Corporate plans have been raising their allocations to fixed income and tinkering with the duration, too,” Frieske says. He adds “this is more talk than action right now” considering that interest rates have remained relatively low for about 18 months.

He adds that institutional clients are either “positioning themselves or talking about positioning themselves” for future movement in fixed income.

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