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CIBC Mellon examines pension plan performance

By The IJ Staff | February 03 2020 12:32PM

Photo: Freepik

Canadian corporate, public and university pension plans, measured by the BNY Mellon Canadian Master Trust Universe, reported higher positive performance in the fourth quarter of 2019 compared to third quarter performance during the year, thanks to rebounding equity markets around the world.

One-year median returns, as measured by the tracking service, came in at 13.92 per cent for the year. The median 10-year annualized return was 8.47 per cent. The measure from CIBC Mellon and The Bank of New York Mellon (BNY Mellon) is comprised of 84 Canadian institutional pension plans worth $253.1-billion in total with an average plan size of $3-billion.

CIBC says continued market uncertainties lead to fixed income reporting negative performance and alternative asset classes posted low but positive results for the quarter, while equity markets rebounding from economic slowdown, helped push performance higher in the fourth quarter.  

Across the board, all equity segment returns were higher during the fourth quarter, compared to the third quarter of 2019: International equity posted the highest quarterly median return at 6.83 per cent, well ahead of the MSCI EAFE Index return of 5.98 per cent. One-year median returns for the international equity segment reached 16.93 per cent.  

Non-Canadian equities underperformed

Although non-Canadian equities underperformed relative to their index (the MSCI World Index returned 6.44 per cent), their quarterly performance was also higher relative to third quarter numbers, with a median return of 6.28 per cent. U.S. equity median performance came in at 5.89 per cent, above third quarter results, but still trailing the S&P 500 Index result of 6.83 per cent. Canadian equity, meanwhile, also came in higher compared to third quarter results, with a median return of 3.26 per cent, ahead of the S&P/TSX Composite Index result of 3.17 per cent. Emerging markets posted higher positive median performance for the quarter, increasing 7.72 per cent compared to the third quarter, but still underperforming the MSCI Emerging Markets Index return of 9.62 per cent. Fixed income returns posted negative performance of -0.92 per cent during the quarter.

Among non-traditional asset classes, real estate delivered the highest performance for the quarter, returning 1.88 per cent. The one-year median return for the real estate class was 7.07 per cent. Private equity investments, meanwhile, delivered a quarterly median return of 1.41 per cent, compared to 3.13 per cent in the third quarter. The one-year median return for the private equity class was 6.72 per cent.  

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