Bolstered by a lift in global equities, Canadian defined benefit pension plans maintained positive growth in the first quarter of 2017 with average returns of 2.9 per cent, according to RBC Investor and Treasury Services.
Positive global economic conditions in the first quarter helped lift global equities to a return of 6.2 per cent for pension plans managed by the firm. This is up from three per cent in the fourth quarter of 2016. Canadian equity returns for these plans retreated slightly quarter-over quarter, returning 2.3 per cent in the first quarter of 2017, compared to 5.7 per cent in the fourth quarter of 2016.
“Canadian pension plan returns, led by strength in Canadian and global equities, are off to a good start in 2017; however vigilance is still required,” said James Rausch, head of client coverage for Canada at RBC Investor and Treasury Services.
“While ongoing business investment in Canada could spur growth, asset managers will undoubtedly be focusing on maintaining a diversified portfolio and actively managing their risk exposure in the period ahead given evolving macro-economic and political forces around the world.”
Canadian fixed income assets rebounded in the first quarter of 2017, posting a return of 1.4 per cent compared to a loss of -3.4 per cent in the fourth quarter of 2016. According to RBC, the Canadian bond market remained stable against a number of national and international events, including the delivery of the Canadian federal budget, a U.S. interest rate hike and continuing Brexit developments.