Survey: Pension Plans, Foundations Saw Modest 1Q Returns
By:
Yuka Hayashi
The Washington Post, May 8, 2002
New York -- Pension plans, foundations and endowments saw modest
investment returns in the first quarter, but the results fell below what
they need to meet their long-term expectations, according to a survey
conducted by Mercer Investment Consulting.
The median corporate pension plan had a first-quarter return of 1%, while
public plans and foundation/endowment funds each saw average returns of 1.2%
on their investments. For the 12-month period ending March, the median
corporate plan made 3.2%, outperforming public plans and
foundations/endowments by 0.5% and 0.1%, respectively.
"Although returns were positive for the quarter, most plan sponsors
are using return assumptions ranging between 8% and 9% and have made only
marginal progress in reaching their year-end targets," Barry McInerney,
the head of the U.S. operations at the investment consulting company, said
in a press release. Plan sponsors, he noted, should brace themselves for the
possibility that they may not meet their return expectations for the third
consecutive year.
Among investment managers, value-oriented managers continued to beat
their growth-oriented peers. Large-cap value managers turned out a
first-quarter return of 3.5% and small-cap value managers had a 9.4% return,
exceeding the pace they need to meet their earlier expectations for a 10%
return for the full year.
Growth managers, on contrast, faced a negative return of 2.4% during the
first quarter, despite their upbeat goal earlier to produce 10% for the full
year, Mercer said.
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