The median Canadian defined benefit pension plan’s investments returned 4.2 per cent during the first quarter of 2022, according to a new report by Northern Trust Canada.
The report draws from the Northern Trust Canada universe, which tracks the performance of Canadian DB plans. It credited the improved position of these plans to the strong performance of equities, particularly in developed markets.
During the quarter, the S&P/TSX composite index, which tracks the performance of Canadian equities, rose 4.6 per cent while the U.S.-focused S&P 500 index gained 7.4 per cent. International developed market equities, as measured by the MSCI EAFE index, returned 8.5 per cent.
The performance of developed market equities was somewhat muted during the quarter. The MSCI emerging markets index advanced 3.9 per cent.
The report also noted the Canadian fixed income market bolstered the performance of domestic DB plans. The FTSE Canada universe bond index rose 3.2 per cent in the quarter.
Provincial bonds outperformed federal and corporate bonds. Long-term bonds also outpaced short-term bonds, indicating investors became less concerned by the prospect of long-term inflation during the period.