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Canadian DB plans up 5.3% in 2016: report

Northern Trust report says rising bond yields helped plan sponsor funding levels.

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Canadian defined benefit pension plans saw a median gain of 5.3 per cent in 2016, according to findings by Northern Trust Co. Canada.

“The net gain in pension returns, coupled with rising bond yields, had a positive impact on Canadian pension funding levels in 2016,” Arti Sharma, head of Northern Trust Canada, said in a release. “As pensions steer their investments through uncertain markets, it is increasingly important that they are equipped with relevant and timely data coupled with appropriate analytical and investment solutions.”

Plans lost 1.2 per cent in the fourth quarter — the first loss since the third quarter of 2015 — primarily because of increased bond yields leading to reduced returns.

Canadian equities, on the other hand, saw a 4.5 per cent return in the fourth quarter, with stocks in financial and energy companies performing particularly well.

Equities from global developed markets, including the United States, posted positive returns in the fourth quarter, but those from emerging markets fell because of the U.S. rate hike, strengthening U.S. dollar and fear of potential protectionist trade policies.

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