Canadian defined benefit pension plans generated a median return of 1.19 per cent in the second quarter of 2023, according to the BNY Mellon Canadian asset strategy view universe.
The universe, which is based on $300.1 billion worth of investment assets in Canadian DB plans, found the one-year median return at June 30, 2023 was 10.05 per cent, while the median 10-year annualized return was 7.33 per cent.
Among traditional asset classes, U.S. equity posted the highest performance, with a quarterly median return of 3.75 per cent, while Canadian fixed income returns were the lowest, posting a negative quarterly return of 0.09 per cent.
In addition, Canada equity posted a median return of 1.49 per cent during the quarter, ahead of the S&P/TSX composite index return of 1.10 per cent. Global equity reported a median return of 3.14 per cent, underperforming the MSCI world index return of 4.62 per cent. Meanwhile, emerging markets equity posted a median return of negative 0.27 per cent, ahead of the MSCI emerging markets index return of negative 1.21 per cent.
In terms of non-traditional asset classes, private equity delivered the highest performance, with a quarterly median return of 0.17 per cent, followed by hedge funds (negative 0.28 per cent) and real estate (negative 0.82 per cent).
“During a time of ongoing global uncertainty, Canadian pension plans remain strong and resilient, achieving positive returns in Q2,” said David Cohen, director of global risk solutions at BNY Mellon, in a press release. “Major equity segments contributed significantly to this success, though Canadian fixed income and some private asset classes faced challenges during the same period.”