Canadian defined benefit plans in the RBC Investor & Treasury Services universe returned 4.8% in the first quarter and 14.8% for the 12 months ended March 31.
Canadian stocks were the top-performing asset class for the Canadian DB plans, at 5.8% for the quarter and 21.2% for the year. However, the return lagged the S&P/TSX Composite index by 0.3 percentage points for the quarter as most DB plans remained underexposed to the asset class, said Scott MacDonald, managing director, pensions, at RBC's custody and asset servicing unit. For the 12-month period, the return outperformed the index by 5.2 percentage points.
Canadian pension funds' foreign equity investments returned 5.3% in Canadian dollar terms for the quarter; for the year, the asset class returned 30.1%. Currency gains accounted for most of the return, Mr. MacDonald said, as over the last year, the Canadian dollar has lost 8% against the U.S. dollar, 14.2% against the euro and 16.2% against the British pound.
Bond investments earned 3.1% for the quarter and 0.7% for the 12-month period.
“Strong equity gains domestically and a weaker Canadian dollar helped boost foreign holdings, but lower long-term-bond yields will have increased most plan liabilities,” Mr. MacDonald said.
The RBC universe comprises public and corporate pension funds with combined assets of C$520 billion (US$471 billion).