Defined benefit plans that are clients of RBC Investor Services delivered a median return of 1.6% in the fourth quarter of 2024 and closed the year with a yearly median return of 11.3%, the best such performance in five years.
These plans had a median return of 14% in 2019, said a spokesperson for RBCIS.
The data comprised various RBCIS client plans across private and public sectors, said a Jan. 30 news release.
Global equities in RBCIS DB plans generated net returns of 4.1% in the fourth quarter of 2024, led by U.S. equities whose returns were boosted by a rapid depreciation of the Canadian dollar versus the U.S. dollar.
Over the fourth quarter, the MSCI World Index returned a net 6.3%, led by the consumer discretionary sector (with a 15.7% net gain), communication services (13.6%) and information technology (11.4%).
On a one-year basis, global equities in client plans returned a net 24.1%, while the MSCI World Index returned a net 29.4%, where the top performing sectors were communication services (46% net return), information technology (45%) and financials (38.2%).
Canadian equities in client plans underperformed their global counterparts, in part due to a smaller exposure to growth-style stocks. They closed the quarter at a net 3.2% and the full year at a net 21.2%, aligning closely with the TSX Composite Index's 3.8% and 21.7% net returns, respectively.
In the Canadian fixed-income asset class, RBCIS DB plans incurred a -0.2% net return for the fourth quarter and 3.6% net return for the full year, aligning with the FTSE Canada Universe Bond Index that returned a net -0.04% for the quarter and a net 4.2% for 2024.
"Our analysis shows solid annual returns for RBCIS DB pension plans, but also emphasizes the need for diversification and active risk management, especially as we enter a year of uncertainty," said Isabelle Tremblay. "Plan managers continue to adapt their strategies for the evolving pension landscape as we prepare for political changes, including possible U.S. government policies and new Canadian prime minister."
RBCIS, a unit of Royal Bank of Canada, has more than C$2.6 trillion ($1.8 trillion) of assets under administration.
