US institutional investors recorded their strongest quarterly results in years during the second quarter of 2026, as global equity markets climbed to new highs on the back of resilient corporate earnings and broad sector participation.
New data from Northern Trust Corporation reveals that all major institutional plan types posted positive returns. Foundations and endowments led the group with a median return of 7.0% for the quarter, while public funds matched the universe median at 6.6%. Corporate plans covered under the Employee Retirement Income Security Act, known as ERISA, returned 4.5% at the median during the same period.
The Northern Trust All Funds Over $100 Million universe tracks 368 large US institutional investment plans holding approximately $1.6 trillion in combined assets and reported a median return of 6.6% for the quarter ended June 30, 2026. The data is drawn from plans that subscribe to Northern Trust's performance measurement services as part of its asset servicing offerings.
US equities were the primary engine of performance. The S&P 500 rose 15.2% in the second quarter of 2026 — its strongest quarterly gain since the COVID-era recovery in 2020, according to data from Meeder Investment Management — and advanced 22.3% over the trailing 12-month period. The Northern Trust US Equity program universe posted a 14.9% median return for the quarter and 22.2% for the year.
The rally, which initially concentrated in large-cap technology and AI hardware companies, broadened in later months to include mid- and small-cap stocks. International markets also contributed. The Northern Trust Non-US Equity program universe returned 11.7% at the median for the quarter.
"Institutional investors benefited from strong market performance across both U.S. and international equities during the second quarter," said Nadia Cobalovic, global head of Integrated Portfolio Services at Northern Trust Asset Servicing in Chicago. "Broad participation across sectors and regions helped support portfolio returns, while ongoing market uncertainty reinforced the value of maintaining diversified, long-term investment strategies."
Fixed income generated modest positive results but lagged sharply behind equities. The Northern Trust US Fixed Income universe returned 1.1% at the median for the quarter and 4.4% over the trailing year — outpacing the Bloomberg US Aggregate Bond Index, which returned 0.6% for the quarter and 3.8% for the year — but remained a drag relative to the broader portfolio.
The bond market backdrop was shaped by a more hawkish Federal Reserve. Following its June 2026 Federal Open Market Committee meeting, the Fed — now under newly confirmed Chair Kevin Warsh — held the federal funds target range at 3.50% to 3.75% while signaling a more restrictive policy outlook in response to rising inflation indicators. Markets are now pricing approximately a 60% probability of a rate hike at the September 2026 FOMC meeting, according to Meeder Investment Management's Q2 2026 Quarterly Perspectives report.
Within ERISA plans, US fixed income remained the largest allocation category, rising to more than 56% — its highest recorded level in the Northern Trust universe. One-, three-, and five-year ERISA median returns were 9.4%, 7.4%, and 2.1%, respectively.
The Foundations and Endowments universe posted the strongest long-term numbers, with one-, three-, and five-year median returns of 15.0%, 12.3%, and 7.0%, respectively. Notably, the median allocation to private equity in that universe declined to below 25% during the quarter — a shift that reflects the relative strength of public equity markets rather than a strategic retreat from the asset class.
Public funds posted one-, three-, and five-year median returns of 13.5%, 11.2%, and 6.8%, respectively. U.S. equity remained the dominant allocation within public plans, with a median weighting of 28.4%, up approximately 1.5 percentage points from the prior year on market-driven appreciation.
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