Despite the challenging economic environment, Canadian defined benefit pension plans saw a median return of 4.27 per cent in the fourth quarter of 2022, according to BNY Mellon’s Canadian master trust universe.

The universe, which is based on $290.3 billion worth of assets under management across 84 corporate, public and university pension plans, found the one-year median return as of Dec. 31, 2022 was negative 7.48 per cent, while the median 10-year annualized return was 7.3 per cent.

“The world continues to face tough economic conditions and elevated risks, including geopolitical uncertainty and ongoing inflation,” said David Cohen, director of global risk solutions at BNY Mellon, in a press release. “We nonetheless saw some positive developments towards the end of 2022, such as the relaxation of China’s zero-COVID policy and the slowing of interest rate increases.

Read: Canadian DB pensions return median 0.27% in Q3 amid challenging economic environment: report

“Positive performance in October and November helped Canadian pension plan sponsors offset some of the underperformance from the first half of the year. Private asset classes continued to provide strong support, while fixed income was a clear detractor as interest rates rose through 2022.”

Indeed, among traditional asset classes, fixed income was the worst performer, posting a flat quarterly return of 0.43 per cent. International equity posted the highest performance, with a quarterly median return of 13.38 per cent.

With respect to non-traditional asset classes, private equity delivered the highest performance, with a quarterly median return of 2.1 per cent, while hedge funds ended the quarter with a median return of 1.74 per cent and real estate delivered a flat performance for the quarter, returning negative 0.19 per cent.

Read: Canadian DB pension plan assets down 7.33% in Q2: report