Equity returns fuel Q3 Canadian pension fund returns
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Equity returns fuel Q3 Canadian pension fund returns 29 October 2020 Toronto Reporter: Drew Nicol
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Strong global equity markets continue to augment pension plan returns with Canadian defined benefit plans returning 3.2 percent for the third quarter, according to the Northern Trust Canada Universe.
The Northern Trust Canada Universe tracks the performance of Canadian institutional investment plans that subscribe to performance measurement services as part of Northern Trust’s asset service offerings.
Overall, equity markets navigated pockets of volatility, closing the quarter in positive territory, while financial markets appeared to shrug off fears perpetuated by the coronavirus pandemic and recent sell-off in technology stocks, to focus on progress in vaccine development and hopes for further stimulus relief.
Meanwhile, policymakers around the world continued to deploy the financial tools necessary in an effort to bridge economic gaps as global economies slowly regained strength while transitioning through the reopening phase.
Canadian equities, as measured by the S&P/TSX Composite Index, generated a return of 4.7 percent for the quarter, with all sectors posting gains with the exception of the health care and energy sectors.
Canadian fixed income market, as measured by the FTSE Canada Universe Bond Index, returned a modest 0.4 percent return for the quarter.
Corporate bonds outperformed both the federal and provincial issuers while mid-term bonds outperformed the short and long term segments of the universe.
The Bank of Canada maintained its overnight interest rate at 0.25 percent, while continuing its pledge to purchase government bonds on a weekly basis.
“The global pandemic has undoubtedly accelerated the pace of change for many defined benefit pension plans over the course of recent months; namely in the form of financial, regulatory as well as technology transformation,” says Katie Pries, president and CEO of Northern Trust Canada.
“As pension plan sponsors embrace this evolution of change and the adaptation to a virtual work environment, they remain vigilant on preserving plan assets while generating investment results supportive of long-term sustainability and growth.”
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