Canadian defined benefit pension plans generated a median return of 4.23 per cent for the first quarter of 2023, according to the BNY Mellon Canadian asset strategy view universe.
Among traditional asset classes, global equities posted the strongest performance, with a quarterly median return of 7.32 per cent, while Canadian fixed income returns were the lowest, posting a quarterly return of 3.46 per cent. Canadian equities returned 4.24 per cent, lower than the S&P/TSX composite index return of 4.55 per cent.
With respect to non-traditional asset classes, private equity delivered the highest performance, with a quarterly median return of 2.02 per cent, followed by hedge funds (1.19 per cent) and real estate (negative 0.15 per cent). Emerging markets equity returned 4.86 per cent for the quarter, ahead of the MSCI emerging markets index return of 3.89 per cent.
“Despite some improvements with headline inflation easing globally and encouraging economic data, the geopolitical backdrop remains challenging due to increased tensions between the U.S. and China and uncertainty in the financial sector that started with the collapse of Silicon Valley Bank,” said David Cohen, director of global risk solutions at BNY Mellon, in a press release.
“Canadian pension plan sponsors posted healthy returns in the first quarter with positive contributions from all major asset classes, both public and private. Equities benefited from a global equity rally, while a drop in bond yields boosted fixed income securities.”