Canadian pension assets rose for a third successive quarter as global financial markets continued to progress during the first quarter, according to the latest survey from RBC Investor & Treasury Services.
Within the $520 billion RBC Investor & Treasury Services All Plan universe – the industry’s most comprehensive universe of Canadian pension plans – defined benefit (DB) pension assets returned 4.8% during the three months ending March 31, 2014, bringing 12 month totals to 14.8%.
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"Strong equity gains domestically and a weaker Canadian dollar helped boost foreign holdings, but lower long-term bond yields will have increased most plan liabilities," said Scott MacDonald, managing director, Pensions for RBC Investor & Treasury Services.
Canadian stocks were the top performing asset class, rising 5.8 per cent for the quarter and 21.2 per cent for the year ending March 2014.
MacDonald said: "Advances were broad across all sectors, led by the materials group and gold stocks in particular which rebounded off last year’s low. Pensions maintained their underexposure to the sector and accordingly lagged the S&P/TSX Composite Index by 0.3 per cent during the quarter but maintained their 5.2 per cent outperformance over the previous 12 months."
Foreign equities moved higher for a seventh successive quarter, advancing 5.3% in Canadian dollar terms against 5.2% for the MSCI World Index.
MacDonald added: "Currency gains accounted for the bulk of the return this quarter, as the Canadian dollar continued to slide against most major currencies. Over the last year, the Canadian dollar has lost eight per cent against the US dollar, 14.2 per cent against the Euro and 16.2 per cent against the British pound."
Bonds also contributed to Canadian pension plan asset growth, earning 3.1% in the quarter thanks to an early January rally.
MacDonald added: "Strength came from the longer end of the curve, with FTSE/TMX Long Term bonds rising 5.1 per cent and FTSE/TMX Real Return Bonds up 6.1 per cent."
