Canadian pension funds continue win streak
03 November 2016 Toronto
Image: Shutterstock
Canadian defined benefit pension plans saw a second consecutive quarter of positive returns in Q3 2016, with RBC Investor & Treasury Services All Plan Universe recording a 7.9 percent improvement on Q3 2015.
RBC’s data, which covers $650 billion worth of Canadian pension fund assets, revealed that the country’s pension funds built upon Q2’s returns of 2.9 percent with 4.2 percent returns last quarter.
Global and Canadian equities both brought 6.7 percent returns for the quarter, up from 1.8 percent and 15.6 percent year-to-date.
RBC described this as a “notable turnaround from a year ago”, when global equities posted a loss of -2.2 per cent in Q3 2015, while Canadian equities suffered losses worth -7.8 percent.
The central bank put these losses down to weakness in the materials and energy sectors.
For fixed income instruments, RBC noted that, due to the on-going low interest rate, long duration bonds were the best performers.
Domestic bonds returned 1.6 percent in Q3 and 6.2 percent year-to-date.
“Canadian pension plans continue to post improved quarter-over-quarter returns this year,” said James Rausch head of client coverage for Canada and global head of transaction banking—banks, brokers and exchanges for RBC Investor & Treasury Services.
“The resources, materials and energy sectors continued to fuel the gains in Canadian equities, while global markets adapted to the post UK referendum landscape and emerging economies realised gains. Global volatility remains a reality as several markets, including China, experience anemic growth despite low or negative interest rate policies. Managing risk will remain a priority for the remainder of 2016.”
RBC’s data, which covers $650 billion worth of Canadian pension fund assets, revealed that the country’s pension funds built upon Q2’s returns of 2.9 percent with 4.2 percent returns last quarter.
Global and Canadian equities both brought 6.7 percent returns for the quarter, up from 1.8 percent and 15.6 percent year-to-date.
RBC described this as a “notable turnaround from a year ago”, when global equities posted a loss of -2.2 per cent in Q3 2015, while Canadian equities suffered losses worth -7.8 percent.
The central bank put these losses down to weakness in the materials and energy sectors.
For fixed income instruments, RBC noted that, due to the on-going low interest rate, long duration bonds were the best performers.
Domestic bonds returned 1.6 percent in Q3 and 6.2 percent year-to-date.
“Canadian pension plans continue to post improved quarter-over-quarter returns this year,” said James Rausch head of client coverage for Canada and global head of transaction banking—banks, brokers and exchanges for RBC Investor & Treasury Services.
“The resources, materials and energy sectors continued to fuel the gains in Canadian equities, while global markets adapted to the post UK referendum landscape and emerging economies realised gains. Global volatility remains a reality as several markets, including China, experience anemic growth despite low or negative interest rate policies. Managing risk will remain a priority for the remainder of 2016.”
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