Canadian pension funds report record-breaking quarterly returns
05 August 2020 Toronto
Image: iQoncept/Adobe.com
RBC Investor & Treasury Services (I&TS) All Plan Universe, which tracks the performance of Canadian defined benefit pension plans, recorded its highest single quarter returns for Q2.
Canadian pension plans experienced a pronounced upsurge in the second quarter, posting a median return of 9.6 percent, according to the RBC I&TS, reversing the steep Q1 losses and raising the median plan’s return to 1.4 percent on a year-to-date basis.
In contrast, the first three months of the year saw the steepest revenue decline since 2008, with Candian pension plans posting a median return of minus 7.1 percent.
For Q2, the median pension plan generated 13.9 percent in its non-Canadian equity holdings, compared to 14.2 percent for the MSCI World index. Strength in the Canadian dollar trimmed some local currency returns over the quarter for unhedged plans (MSCI World Index returned 18.5 per cent in local currency terms).
The gains followed a series of aggressive fiscal and monetary support measures introduced in March to address the impact of the virtual shut down of the global economy due to COVID-19.
The surge was also driven by the sharp rally in global equity markets following their March lows, which has now seen most indexes a recover much of their losses from Q1.
RBC notes that while there was a brief surge in cyclical stocks, growth stocks ultimately outperformed value.
“The actions the Bank of Canada and Federal Government have taken over the past months to support the economy and financial system are unprecedented – not even seen following the 1929 stock market crash – and the markets have been quick to respond,” remarks RBC I&TS’ managing director and head of asset servicing, Canada, David Linds.
Canadian pension plans experienced a pronounced upsurge in the second quarter, posting a median return of 9.6 percent, according to the RBC I&TS, reversing the steep Q1 losses and raising the median plan’s return to 1.4 percent on a year-to-date basis.
In contrast, the first three months of the year saw the steepest revenue decline since 2008, with Candian pension plans posting a median return of minus 7.1 percent.
For Q2, the median pension plan generated 13.9 percent in its non-Canadian equity holdings, compared to 14.2 percent for the MSCI World index. Strength in the Canadian dollar trimmed some local currency returns over the quarter for unhedged plans (MSCI World Index returned 18.5 per cent in local currency terms).
The gains followed a series of aggressive fiscal and monetary support measures introduced in March to address the impact of the virtual shut down of the global economy due to COVID-19.
The surge was also driven by the sharp rally in global equity markets following their March lows, which has now seen most indexes a recover much of their losses from Q1.
RBC notes that while there was a brief surge in cyclical stocks, growth stocks ultimately outperformed value.
“The actions the Bank of Canada and Federal Government have taken over the past months to support the economy and financial system are unprecedented – not even seen following the 1929 stock market crash – and the markets have been quick to respond,” remarks RBC I&TS’ managing director and head of asset servicing, Canada, David Linds.
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