Canadian defined benefit plans posted positive investment returns in the third quarter, Northern Trust pension universe data found.
For the quarter ended Sept. 30, the median plan in the Northern Trust Canada Universe returned 1.6%, according to the findings released Tuesday.
"Despite a backdrop of persistent volatility, fear and uncertainty, Canadian pension plans displayed resilience in the third quarter," Arti Sharma, president and CEO of Northern Trust Canada, said in the news release. "Although returns moderated slightly from the previous two quarters, year-to-date the median pension plan remains in positive territory positioned at a healthy 11.3%."
During the quarter, investors looked with uncertainty at U.S.-China trade negotiations, Brexit and the impeachment inquiry into President Donald Trump, the news release said. Civil unrest in Hong Kong and the crash of Argentina's Merval Equity index also contributed to the sense of uncertainty.
Furthermore, "the brief inversion of the U.S. yield curve also sparked investor fears surrounding the future state of the global economy," the release said.
The findings come as Canadian DB plan sponsors are focusing more on long-term goals and insulating their investment portfolios from market risk, a biennial pension risk survey published this month by Aon found.
Of note, 96% of DB plans had a long-term strategy to reach their investment objectives, up from 50% a decade ago, the survey found. Also, over half of sponsors with a long-term investment strategy in place said that sustainability — "having an affordable level of contributions with low volatility" — was their top strategy for reaching long-term goals, the release from Aon said.
"When it comes to investments, plan sponsors are embracing more active approaches to managing market risk," Erwan Pirou, chief investment officer for Aon's delegated investment solutions in Canada, said in a statement in the news release. "We're seeing more delegated management, global diversification and alternative assets in the mix, but sponsors will need to continue to be dynamic in their investment stance, while paying even closer attention to risk mitigation," he added.
