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DB pension plans lose ground in Q1

By The IJ Staff | April 30 2020 12:00PM

Canadian defined benefit pension plans in the RBC Investor & Treasury Services All Plan Universe experienced their steepest decline since 2008, posting a median return of -7.1 per cent for the first quarter of 2020.

The All Plan Universe tracks performance and asset allocation for a cross-section of assets under management across Canadian defined benefit pension plans.

Comparatively speaking, the MSCI World Index posted a quarterly return of -13.3 per cent and the S&P/TSX Composite Index posted a return of -20.9 per cent for the quarter. The FTSE Canada Universe Bond Index, meanwhile, posted a quarterly return of 1.6 per cent, affording plans some shelter from equity market losses. Short-term bonds outperformed their longer term counterparts, and investors sold off riskier investments to instead embrace government bonds. RBC also says plans with unhedged exposure to non-Canadian equities were somewhat sheltered from local currency losses.

“It has been an exceptionally difficult period for Canadian pension plans to navigate, as the markets have been experiencing an unprecedented amount of volatility across asset classes,” says RBC Investor & Treasury Services head of Canadian asset servicing, David Linds. “However the substantial monetary and fiscal policy response from governments across the globe gives us room for optimism. While it’s difficult to speculate on what may happen over the short term, we hope these measures will lead to some reawakening of our economic growth in the near future.”

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