WASHINGTON — Large public pension and other funds tracked by the Wilshire Trust Universe Comparison Service outperformed small ones in the first quarter of 2014.
The median return for public funds with assets of less than $1 billion was 1.71%, while the median return for public funds with more than $1 billion was 2.05%. The median return for all public funds was 1.87%, according to Wilshire TUCS.
The public fund category mostly consists of defined benefit pension plans but also includes a few other types of plans, such as defined contribution pension plans and health & welfare plans. Ninety-five of the public funds Wilshire TUCS tracks are at the state and local government level, and 168 of the plans are at the local government level, according to Wilshire Associates Inc. Wilshire TUCS is a cooperative effort between the investment technology unit of Wilshire Associates and custodial organizations.
Public funds performed worse last quarter than they did in the fourth quarter of 2013. In the first quarter, all public funds and small funds each had a median return of 5.31%. Public funds with assets greater than $1 billion had a median return of 5.23%, Wilshire said.
Large public funds tend to outperform small ones when it is beneficial to have more diversification in portfolios and exposure to asset classes like international and alternative investments, said Robert J. Waid, Wilshire Associates managing director. Smaller funds frequently have larger exposures to the U.S. equity and fixed income asset classes. Across the categories of institutional funds Wilshire TUCS tracks, large institutional funds outperformed small ones in the first quarter of 2014. The median return for all institutional assets tracked was 1.66%.
