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Pension Funds

Canadian pension plans eke out 0.1% return in third quarter – RBC

Canadian corporate and public pension plans in the RBC Investor & Treasury Services universe barely had positive performance in the third quarter, with an overall 0.1% return gross of fees.

The overall return for the universe, which has a combined C$650 billion ($503.2 billion) in pension assets, was down from the 2.2% return in the second quarter and 0.4% in the third quarter of 2017.

Despite the small margins, the three months ended Sept. 30 is the 10th consecutive quarter of positive returns in the universe, RBC I&TS said in a news release. The last overall quarterly loss was in the third quarter of 2015, when plans returned -2%, while the first quarter of 2016 was flat.

Negative returns in Canadian equities, at -0.3%, reversed the 6.8% gain in the previous quarter, spurred by declines in energy and materials stocks as well as interest rate increases and concern over trade issues. Rate and trade concerns did not impact global equity returns as much, at 2.3% in the latest quarter, although that's below the 2.6% return in the previous quarter, RBC I&TS said.

Canadian fixed income was hit by an increase in long-term yields, resulting in a -1.5% return in the third quarter compared to a 0.6% gain in the second quarter.

Ryan Silva, RBC I&TS director and head of pension and insurance segments, global client coverage, said in the news release that the United States-Mexico-Canada Agreement, reached on Sept. 30, should provide some relief for Canadian pension investments in the fourth quarter, but "ongoing geopolitical concerns, interest rate anxieties globally, and an economic slowdown in China shouldn't be ignored."