Canadian defined benefit plans posted positive investment returns in the second quarter thanks to strong global equity markets overcoming fears of inflation, data from Northern Trust showed.
The median Canadian plan posted a 4.1% return for the second quarter of 2021, according to the Northern Trust Canada Universe, up from the median loss of 0.2% reported in the first quarter.
Canadian DB plans benefited from financial markets recovering from the stresses inflicted by the COVID-19 pandemic. And while fears of rising interest rates created pockets of uncertainty, they ultimately subsided, which led to diminished volatility.
"The second quarter of 2021 can be characterized as a period of transition, whereby global economies continued to eye reopening while charting a path to a normalized growth environment," said Northern Trust Canada President and CEO Katie Pries in a news release announcing the results.
"The course of the pandemic has certainly taught us attributes about strength and adaptation, fundamentals we can all relate to," Ms. Pries said. She added,"These key components continue to build on the foundation of Canadian pension plans today, a testament to their longevity and long-term sustainability."
Canadian equities and U.S. equities returned 8.5% and 6.9%, respectively, in the quarter ended June 30, as measured by their respective S&P/TSX and S&P 500 indexes.