Pension assets rose for a fifth successive quarter despite concerns over anemic economic growth in the Eurozone and escalating global issues during the three months ending September, 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 plans returned 1.1 per cent during the third quarter 2014, bringing year-to-date results to 8.6 per cent.
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"While Canadian plan assets have performed strongly in 2014, the steady decline in long-term yields means plan liabilities have likely increased as well," said Scott MacDonald, managing director, Pensions, RBC Investor & Treasury Services. Foreign equities was the best performing asset class in the third quarter as the MSCI World Index gained 2.7 per cent in Canadian dollar terms.
"Foreign currency gains made up the lion’s share of the quarterly return, with the U.S. dollar gaining 4.9 per cent against the loonie," said MacDonald. Year-to-date results show foreign assets up 8.4 per cent, trailing the MSCI World Index benchmark by 0.9 per cent. Canadian equities were dragged down by falling commodity prices as the S&P/TSX Composite Index fell by 0.6 per cent in the third quarter, bringing year-to-date returns to 12.2 per cent.
"The decline in energy and material stocks more than offset gains in the other TSX sectors," said MacDonald. Pensions underperformed the index for the quarter by 0.5 per cent and by 0.7 per cent year-to-date.
"Bonds gave back some of their gains in September but still returned 1.1 per cent for the quarter and 6.5 per cent year-to-date. As in the first half of the year, long-term bonds continued to generate higher returns with the FTSE/TMX Long Term bonds index returning 2.3 per cent for the quarter and 11.6 per cent year-to-date" said MacDonald.
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