Canadian corporate and public pension plan returns in the RBC Investor & Treasury Services universe were flat in the first quarter, with a slight median gross decline of 0.2%.
The return for the quarter (down from a 5.4% increase in the fourth quarter) was primarily due to fixed-income securities losing ground during a quarter that saw global equity markets continue to rally, according to a news release Thursday.
Fixed-income assets held by pension plans had a median return of -7.1% in the three months ended March 31, compared to a return of 1.1% in the prior quarter.
The FTSE TMX Universe Canadian Bond index returned -5% for the quarter. Longer-duration bonds (FTSE TMX Long Term index) returned -10.7%, whhile shorter-duration bonds (FTSE TMX Short Term index) returned -0.6%.
The news release said fixed-income performance fell as investors readied themselves for mounting inflationary pressure in the face of projections showing higher expected growth.
Canadian DB plans' international equity portfolios returned 3.7% in the first quarter, compared to the MSCI World index return of 3.5%.
"We have seen the markets price in a very optimistic economic scenario based on forecasts of strong GDP growth, the gradual ramping up of the vaccine supply and fiscal and monetary stimulus," said David Linds, managing director and head of asset servicing, Canada, at RBC Investor & Treasury Services, in the news release. "However, plan sponsors should continue to be on guard for risk factors such as the emergence of potent COVID-19 variants and supply constraints in a highly competitive global vaccine market."
Plans in the RBC Investor & Treasury Services universe returned a median -7.1% in the first quarter of 2020.