On the whole, Canadian managers fared significantly better in 1995 than in 1994.
According to data of William M. Mercer Ltd., Toronto, the median balanced pooled pension fund manager in Mercer's universe posted a 17.34% return in 1995, compared with -1.33% the year before, and the median Canadian equity pooled pension fund manager gained 14.52% last year, vs. -1.07% in 1994.
According to Mercer investment consultant Brian White, the significant story in 1995 was the comeback of Canadian growth stocks, which had performed poorly the year before. Exposure to the booming U.S. stock market also helped; Canadian equity funds by law can hold up to 20% of book value in the U.S. market.
In addition, the median bond pooled pension fund manager returned 20.6%, while the median U.S. equity pooled pension manager gained 28.29%.
However, in each of Mercer's four main categories of pooled funds - balanced, Canadian equities, bond and U.S. equity - the median manager underperformed the index. A passively managed portfolio beat the median balanced pooled pension fund manager by 125 basis points; the Toronto Stock Exchange Index bested the median Canadian equity pooled manager by one basis point; the ScotiaMcLeod bond universe outpaced the median bond pooled pension fund manager by seven basis points; and the Standard & Poor's 500 Stock Index finished 539 basis points higher than the median U.S. equity pooled pension fund, Mercer's data show.
