U.S. Institutional Plan Sponsors Had Positive Start to 2012, according to Northern Trust Universe Data

Study of Allocation Trends Charts Move to Alternative Assets over Past Decade

Northern Trust announced today that U.S. institutional investment plan sponsors in the Northern Trust Universe gained approximately 7 percent at the median in the first quarter of 2012, with returns boosted by strong equity market performance. The Northern Trust Universe represents the performance of about 300 large institutional investment plans, with a combined asset value of approximately $733.5 billion, which subscribe to Northern Trust performance measurement services.

Public Funds set the pace with a median return of 7.7 percent for the first quarter, while Corporate ERISA Pension Plans and the Foundations & Endowments segment each gained 6.9 percent at the median for the three months ending March 31, 2012.

"The main driver of first quarter performance was U.S. equities, a core holding in most institutional plans," said William Frieske, senior performance consultant, Northern Trust Investment Risk & Analytical Services (IRAS). "After positive returns in 10 of the last 12 quarters, the median plan has gained 15 percent in the past three years. Active investment management has also helped plans in the Northern Trust Universe to generate returns ahead of their assigned benchmarks, according to our data."

In the first quarter, the median U.S. Equity Program in the Northern Trust Universe gained 12.9 percent, 4 basis points ahead of the Russell 3000 Index return. Overall, institutional plan sponsors edged ahead of their assigned benchmarks by about 2 basis points in the first quarter. Over a 10-year period, Institutional Plan Sponsors have been able to generate about 30 basis points of excess performance annually.

International Equity Programs gained almost 12 percent in the first quarter while Fixed Income Programs were up 1.6 percent. Looking at alternatives, Real Estate gained 2.6 percent; Private Equity was up 2.2 percent and Hedge Funds returned 4.8 percent in the quarter, rebounding from the previous quarter's 0.7 percent loss.

While U.S. Equity remains a key investment for U.S. institutional investors, new research on Northern Trust Universe data shows that plan sponsors have made significant shifts in asset allocation over the past decade. Across the universe base, the allocation to U.S. equity decreased from 50 percent of total assets in 2000 to 32 percent in mid-2011. In the same period, private equity allocations rose from 3.5 percent of total assets to 8 percent, and allocations to hedge funds went from near zero to more than 5 percent of all mandates.

"Alternative assets have become mainstream over the past decade, especially within the largest plans," says Jeff Feeney, North America Region Head of IRAS. "Investing in alternative assets brings the promise of better than public market returns but also the reality of administrative demands brought on by the lack of transparency and liquidity inherent in these asset classes."

The research paper by Melissa Galla and Muriel Gutierrez, titled Asset Allocation Trends and Challengestracks 10 years of decision-making by investors in the ERISA, not-for-profit, and Public Funds segments using the Northern Trust Universe data. It details – in narrative and graphical format – shifting global asset mixes, the rise of alternative asset classes, and the early adoption of socially responsible investing over the past decade.

In the three-and five-year periods, as of March 31, 2012, performance results for all plans in the Northern Trust Universe are:

Â	Â	Â	Â	3 Yr	Â	Â	Â	5 Yr
Corporate ERISA Pension Plans	Â	Â	Â	17.9%	Â	Â	Â	3.6%
Public Funds				16.1%				3.0%
Foundations & Endowments				14.9%				2.5%

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2012, Northern Trust had assets under custody of US$4.6 trillion, and assets under investment management of US$716.5 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.

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