Canadian defined benefit pension plans generated a median return of negative 1.99 per cent in the third quarter of 2023, according to the BNY Mellon Canadian asset strategy view universe.

The universe, which is based on $290.2 billion worth of investment assets in Canadian DB plans, found the one-year median return was 8.01 per cent at Sept. 30, 2023, while the median 10-year annualized return was 6.52 per cent.

Among traditional asset classes, international equities posted the highest performance, with a median return of negative 1.37 per cent, while Canadian fixed income returns were the lowest, posting a return of negative 4.94 per cent.

Read: Canadian DB pension plans return 1.19% in second quarter of 2023: report

In addition, Canada equity posted a median return of negative 2.07 per cent during the quarter, ahead of the S&P/TSX composite index return of negative 2.2 per cent. Global equity saw a median return of negative 1.7 per cent, underperforming the MSCI world index return of negative 1.26 per cent. Meanwhile, emerging markets equity posted a median return of negative 1.28 per cent, underperforming the MSCI emerging markets index return of negative 0.68 per cent.

Hedge funds delivered the highest performance for the non-traditional asset classes, with a quarterly median return of 4.19 per cent, followed by private equity (3.16 per cent) and real estate (0.59 per cent).

“After posting strong performance returns in the first half of the year, the Canadian pension plans stumbled in Q3 due to increased recession fears, a predicted extended period of central bank tightening and an uncertain economic and political environment,” said David Cohen, director of global risk solutions at BNY Mellon, in a press release.

“All traditional asset classes struggled in the third quarter with September being the major catalyst. All equity segments posted negative returns, while the rise in yields caused further declines in fixed income. Private asset classes continue to provide some support.”

Read: Canadian DB pension plans see median return of 4.23% in Q1 2023: report