Rising bond yields caused Canadian defined benefit plans to post relatively flat investment returns in the first quarter, data from Northern Trust show.
The median Canadian plan posted a -0.2% return for the first quarter of 2021, according to the Northern Trust Canada Universe, down from the median return of 5% reported in the fourth quarter of 2020.
"Pension plan investments were dampened by weaker bond returns," said Northern Trust Canada President and CEO Katie Pries in a news release announcing the results. "Vaccination progress has given plan sponsors a more optimistic view of the future path to recovery. This positive outlook, however, triggered bond returns to enter negative territory, diminishing the impact of equity investment gains."
Ms. Pries added: "Emerging from the pandemic requires time and resilience, and this quarter has provided renewed visibility for many, as we continue on a journey to restore, rebuild and reshape economic and financial health."
Canadian equities and U.S. equities returned 8.1% and 4.7%, respectively, in the quarter ended March 31, as measured by their respective S&P/TSX and S&P 500 indexes. Canada's fixed-income market as measured by the FTSE Universe Bond index, meanwhile, declined 5% for the quarter.