Northern Trust Universe Data: Rate Cuts, AI Momentum and Tariff Stabilization Fuel Third Quarter Market Gains

CHICAGO--(BUSINESS WIRE)--Global markets delivered positive results for U.S. institutional investors in the third quarter of 2025, supported by a Federal Reserve interest rate cut, developments in artificial intelligence (AI) and stabilization of tariff negotiations. The Northern Trust All Funds Over $100 Million plan universe had a median return of 4.3% for the quarter.

The Northern Trust Universe tracks the performance of 363 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.

Performance varied across plan types, with the Northern Trust Corporate (ERISA) universe returning 3.7% at the median for the quarter while the Northern Trust Public Funds universe median return was 4.0% and the Northern Trust Foundation and Endowment (F&E) universe produced a 4.3% median return.

U.S. equity markets delivered notable returns during the third quarter, with the S&P 500 gaining 8.1% for the quarter, up 35% since its April low. AI-driven momentum boosted sectors like semiconductors and electric utilities in the U.S. The Northern Trust US Equity program universe posted a 7.2% median return, while The Northern Trust Non-US Equity program universe had a median return of 6.1% in the quarter.

John Turney, global head of Total Portfolio Solutions at Northern Trust Asset Servicing, said: “Strong third quarter results reflect the continued adaptability of institutional investors. With monetary policy shifting and AI innovation accelerating, our clients are navigating market complexity with confidence and precision.”

Fixed income markets benefited from the Fed’s 25 basis point rate cut in September, which lowered treasury yields and narrowed credit spreads, boosting bond prices. Inflation remained moderate, with the Consumer Price Index rising just 0.4% in August and 2.9% year-over-year. The European Central Bank maintained its interest rate at 2% and continued policies aimed at supporting 2% economic growth. The Northern Trust US Fixed Income program universe returned 2.4%.

The ERISA plan one, three, and five-year median returns were 5.1%, 9.1%, and 4.1%, respectively. In the Northern Trust ERISA plan universe, the median allocation to U.S. fixed income was 55%, supporting liability-driven strategies. This substantial allocation to fixed income helps dampen volatility relative to other plan sponsor types.

The Public Funds universe median returns for the one, three, and five-year periods stood at 9.6%, 11.9%, and 8.7%, respectively. These funds typically prioritize liquid asset classes to maintain flexibility and meet short-term funding needs. Their investment strategies often emphasize readily tradable securities, such as public equities and fixed income, which allow for efficient portfolio rebalancing and timely response to market developments. U.S. equity represents the largest allocation at 26%, followed by U.S. fixed income at 22%.

In the Foundations & Endowments universe, median one, three, and five-year returns were 10.6%, 12.9% and 9.8%, respectively. Investors maintain a significant allocation to private assets, with a median private equity allocation over 20%. These plans often pursue long-term growth through alternative investments such as private credit, infrastructure, and real estate, which can offer diversification and return potential beyond traditional asset classes. However, due to the lag in valuation reporting from limited partnerships, short-term performance may not fully reflect current market conditions.

Results as of September 30, 2025:

	3rd Qtr	1Yr	3Yr	5Yr
ERISA	3.7%	5.1%	9.1%	4.1%
Public Funds	4.0%	9.6%	11.9%	8.7%
Foundations & Endowments	4.3%	10.6%	12.9%	9.8%

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking services 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 September 30, 2025, Northern Trust had assets under custody/administration of US$18.2 trillion, and assets under management of US$1.8 trillion. For more than 135 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 Instagram @northerntrustcompany or Northern Trust 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.