More Gains for Canada’s DB Pension Plans

Even as Canadian equities lag, pension funds gain.

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looniesCanadian DB pension plans have posted gains for 5 quarters in a row according to RBC Investor & Treasury Services, even in the face of poor returns from Canadian equities. While domestic stocks returned -1.9%, Canadian pension funds gained 1.4% during the same quarter.

This is largely because they’ve continued to trim exposure to Canadian equities compared to global equities and domestic bonds.

There are signs, however, that the solid performance of global stocks has reached a peak – political risk in the U.S. and disappointing growth numbers.

Canadian fixed income returns continued to improve, posting gains of 1.4% after treading into negative territory in Q4 2016 (-3.4%). That happened as global bond markets weakened on prospects that central banks will begin pulling back on stimulus packages and raising interest rates.

A strong Canadian dollar also pushed down stock and prices during the quarter – the U.S. dollar continued its slide against the Canadian dollar, falling further into the red at -2.62 per cent, down from -0.6 per cent in Q1 2017.

Canadian DB Plans – Historic Performance 

Period Return (%) Period Return (%)
Q2 2017 1.4 Q1 2015 6.6
Q1 2017 2.9 Q4 2014 2.7
Q4 2016 0.5 Q3 2014 1.1
Q3 2016 4.2 Q2 2014 3.0
Q2 2016 2.9 Q1 2014 4.8
Q1 2016 0.0 Q4 2013 6.1
Q4 2015 3.1 Q3 2013 3.6
Q3 2015 -2.0 Q2 2013 0.0
Q2 2015 -1.6 Q1 2013 4.4
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