Le Lézard
Subject: Economic News/Analysis

Northern Trust Universe Data: Lower Interest Rates Paved the Way for a Strong Rally in Q4

Cooling inflation, softening labor markets and lower interest rates during the fourth quarter paved the way for a strong rally in financial markets to end 2023. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was 7.3% for the quarter ending December 31, 2023. The median 12-month return for the universe was 11.3%.

The Northern Trust Universe tracks the performance of 406 large U.S. institutional investment plans, with a combined asset value of more than $1.4 trillion, which subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

The Northern Trust Corporate (ERISA) universe median return for the quarter was 9.5% while the Northern Trust Public Funds universe median return was 6.4%, and the Northern Trust Foundation and Endowment (F&E) universe produced a 5.5% median return.

"The final quarter of 2023 saw markets rally as a result of the reduction in the pace of inflation and increased hopes that the U.S. market will be able to avoid a recession," said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. "Though market volatility posed many challenges for investors during the year, we saw this shift in the fourth quarter and ended on a positive note." The Northern Trust U.S. Equity Program universe generated an 8.5% median return for the fourth quarter, following guidance from the Federal Reserve that interest rate cuts may come sooner than previously anticipated. Small cap stocks outperformed large cap stocks, with the Russell 1000 large cap index returning 12.0%, compared to the Russell 2000 small cap index which returned 14.0% for the period.

The Northern Trust U.S. Fixed Income program universe median return was 5.3% for the quarter. The U.S. ten-year government bond yield fell from 4.59% to 3.88% during the quarter and the two-year government bond yield fell 78 basis points to 4.25%.

ERISA plan universe median one-, three- and five-years returns were 10.3%, -1.0% and 6.1%, respectively. The U.S. fixed income asset class remains the largest ERISA plans allocation with a median allocation of 53.1%, enabling the client segments to outperform the other segments as a result of rising bond prices during the quarter. The segment continues to have small allocations to alternative assets, where the median allocation to private equity is 2.3% and the median allocation to hedge funds is 0%.

Public Funds universe median returns for the one-, three- and five-year periods stood at 10.6%, 4.6% and 8.3%, respectively. The median quarter allocation to U.S. and international equity are 28.1% and 12.6%, respectively, while the median exposure to U.S. fixed income is 22.2%. The segment continues to increase allocations to private equity, where the median allocation now stands at 14.0%.

The F&E universe median one-, three- and five-years returns were 11.3%, 5.2% and 9.1%, respectively. The F&E universe Foundation and Endowment is continuing the trend to allocate funds to the private equity asset class. The median allocation to private equity now stands at 24.1%, a slight decline from the prior quarter, resulting from strong returns in the U.S. fixed income segment where the median allocation to bonds grew from 8.3% to 8.7%.

Results as of December 31, 2023:




4th Qtr

















Public Funds










Foundations & Endowments







About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2023, Northern Trust had assets under custody/administration of US$15.4 trillion, and assets under management of US$1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on X (formerly Twitter) @NorthernTrust or Northern Trust Corporation on LinkedIn.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.

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