Canadian defined benefit funds in the RBC Investor & Treasury Services universe returned 3% in the second quarter and 7.8% for the first six months of the year.
The quarterly returns are below the 4.8% of the first-quarter survey. Scott MacDonald, managing director, pensions, at RBC Investor & Treasury Services, said a stronger Canadian dollar and lower Canadian and U.S. equity returns were responsible for the lower figure.
As in the first quarter, Canadian equity was the top-performing asset class for the three months ended June 30, at 6.42%. Canadian stocks returned 12.62% year-to-date through June 30. Mr. MacDonald said financials and energy accounted for most of the gains.
Bonds gained 2.1% for the quarter and 5.5% for the first half of 2014, both better than expected because of declining interest rates, Mr. MacDonald said.
Pension funds’ foreign stock investments returned 1% in the quarter, compared to the 4.4% return of the MSCI World index; Mr. MacDonald blamed foreign exchange losses because of a strong Canadian dollar vs. the U.S. dollar and the euro for the tepid results. However, for the first six months of the year, foreign equity assets are up 6.4%, in line with the MSCI World.
Pension funds in the universe have a combined C$520 billion (US$479 billion) in assets.