RBC: Slight growth for defined benefit pension plans
06 November 2018 Toronto
Image: Shutterstock
Canadian defined benefit pension plans posted a slight uptick in Q3 2018, returning 0.1 percent, down from Q2 returns of 2.2 percent, according to the RBC Investor & Treasury Services (RBC I&TS).
Canadian equities posted a negative Q3 2018 return of -0.3 percent, reversing the Q2 2018 returns of 6.8 percent.
Healthcare was “the sole bright spot” in Q3, RBC I&TS said, due to robust performing cannabis stocks.
Interest rate hikes and ongoing trade tensions also negatively impacted return levels.
RBC found global equity returns were subdued due to trade war fears and central bank rate hikes. However, it managed to post another quarter of positive returns—2.3 percent in Q3 2018, compared to 2.6 percent in Q2 2018.
MSCI World Index gained 3.2 percent this quarter, versus 3.8 percent in Q2 2018 while emerging markets dropped another 2.8 percent.
Rising long-term yield levels helped pull back Canadian fixed income returns in Q3 2018 compared to the previous quarter. Q3 2018 returns were -1.5 percent compared to 0.6 in Q2 2018.
Ryan Silva, director and head of pension and insurance segments, global client coverage at RBC I&TS, said: “Despite a lackluster quarter for Canadian equities, Canadian pension returns remain in positive territory for 2018 at 6.7 percent for the year. Interest rate hikes and free trade negotiations weighed on Canadian indices and impacted returns this quarter.”
He added: “However, the newly negotiated US, Mexico,Canada agreement should provide some relief in Q4 2018. Conversely, as we head into the final quarter of the year, ongoing geopolitical concerns, interest rate anxieties globally, and an economic slowdown in China shouldn’t be ignored.”
“Asset managers will need to maintain their vigilance to the ongoing volatility and retain a diversified portfolio to actively manage their risk exposure.”
Canadian equities posted a negative Q3 2018 return of -0.3 percent, reversing the Q2 2018 returns of 6.8 percent.
Healthcare was “the sole bright spot” in Q3, RBC I&TS said, due to robust performing cannabis stocks.
Interest rate hikes and ongoing trade tensions also negatively impacted return levels.
RBC found global equity returns were subdued due to trade war fears and central bank rate hikes. However, it managed to post another quarter of positive returns—2.3 percent in Q3 2018, compared to 2.6 percent in Q2 2018.
MSCI World Index gained 3.2 percent this quarter, versus 3.8 percent in Q2 2018 while emerging markets dropped another 2.8 percent.
Rising long-term yield levels helped pull back Canadian fixed income returns in Q3 2018 compared to the previous quarter. Q3 2018 returns were -1.5 percent compared to 0.6 in Q2 2018.
Ryan Silva, director and head of pension and insurance segments, global client coverage at RBC I&TS, said: “Despite a lackluster quarter for Canadian equities, Canadian pension returns remain in positive territory for 2018 at 6.7 percent for the year. Interest rate hikes and free trade negotiations weighed on Canadian indices and impacted returns this quarter.”
He added: “However, the newly negotiated US, Mexico,Canada agreement should provide some relief in Q4 2018. Conversely, as we head into the final quarter of the year, ongoing geopolitical concerns, interest rate anxieties globally, and an economic slowdown in China shouldn’t be ignored.”
“Asset managers will need to maintain their vigilance to the ongoing volatility and retain a diversified portfolio to actively manage their risk exposure.”
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