by:

Brendan Cooper
Senior Product Manager, Confluence

Executive Summary

The Q1 2025 Confluence Plan Universe Report – the industry’s most granular analytics tool for plan sponsors with data sourced directly from over 4,000 institutions – reported a relatively flat quarter for defined benefit plans.

Q1 2025 marked a reversal for investors from the previous quarter as geopolitical tensions and tariff uncertainties weighed on sentiment. The Russell 1000 Index returned -4.49%, while non-U.S. equity markets were up significantly, with the MSCI EAFE Index returning 7.01%. For international equity markets, Q1 2025 was the greatest quarterly outperformance of domestic equity since Q2 2002. Within fixed income, the U.S. Bloomberg Aggregate Index returned 2.78% for the quarter, while the Bloomberg U.S. Long Treasury Index returned 4.67%.

Highlights

• All defined benefit plans posted a median return of .52% for the quarter, outperforming a traditional 60/40 benchmark return of 0.40%. (60% MSCI ACWI Index/ 40% Bloomberg Barclays U.S. Aggregate Index).
• For the year ending March, all defined benefit plans posted a median return of 5.21%, down over 6.5% compared to a year ago.
• U.S. equity, a key driver of performance in the previous two years, negatively impacted performance across defined benefit plans with a median level return of -4.69%. Comparatively, the median returns for U.S. fixed income and alternatives were 2.67% and 1.09%.
• Corporate defined benefit plans, driven by their fixed income allocation and exposure to long bonds, were the best performers by plan type during the quarter, returning 1.78% at a median level.
• High Net Worth plans, driven by their comparatively high equity and low fixed income allocations, were the worst performers by plan type for the quarter, returning -.73% at a median level.

Plan Performance Over Time

The first quarter of 2025 marked a pivot toward defensiveness. Bond markets rallied as equity markets reversed, driven by renewed market volatility and economic uncertainty. With major asset classes delivering relatively muted performance, the Confluence All Defined Benefit Plan Sponsor Universe posted a median return of .52%.

Historical Plan Comparison

Corporate plans, which have significantly higher exposures to fixed income compared to other plan types, were the best performers for the quarter. As Figure 2 highlights, High Net Worth plans had the poorest performance for the quarter, driven by their higher equity exposure, which was the worst performing asset class.

Plan Allocation Analysis

Corporate plans, which outperformed all other plan types for the quarter, continue to hold the largest fixed-income allocation. Since Q1 2024, all plan types allocation to fixed income have increased by an average of 3%. Conversely, allocations to equity have decreased by an average 2.3% in the last year.

U.S. Equity Performance

U.S. public equity markets posted negative returns in Q1 2025. The Russell 1000 Index returned -4.49%, compared to defined benefit plans, which had a median U.S. equity return of -4.68%. Corporate plans continue to be underweight U.S. equity, with a median allocation of 17.13%, roughly half of the allocation compared to other plan types. All plan types decreased their allocation to U.S. equity in Q1.

U.S. Fixed Income Performance

All plan types increased their allocation to U.S. Fixed income over the last year, led by Endowments & Foundations by 3.25%. Corporate plans, which have the highest allocation to the asset class at 60.25%, also increased their allocation by more than 3% over the last year.

Alternatives Performance

Due to their lower exposure to private equity, corporate plans allocate half the amount to alternatives compared to other plan types. Allocations at a median level were down across all plan types, other than Endowments & Foundations, which saw a slight increase to their alternative allocations over the last year.

Confluence Plan Universe

Confluence Plan Universe is the industry’s most granular analytics tool for plan sponsors including standard and custom peer group comparisons of performance, risk, and asset allocations by plan type and size. The data is sourced directly from over 4,000 institutions using our reporting and analytics solutions, including investment consultants, advisors, and asset owners. Plan Universe is updated quarterly and typically available on or near the following schedule: preliminary data available on the 14th business day after quarter end, a second cut on the 21st business day, and final cut on the 29th business day. The data includes 20+ years’ history on:

• Trust Funds, Corporates, Public Plans, Taft-Hartley, Endowments & Foundations, High Net Worth, Health & Welfare, and custom groups.
• Asset Allocations broken into equity (US, global, global ex- US), fixed income (US, global, and global ex-US), alternatives, real estate (public and private), multi-asset and cash. Emerging Markets allocations are available for equities and debt securities.
• Net and gross performances displayed by quartile with full percentiles via download.
• With all information aggregated by Plan Size.

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