Buoyed by rebounding Canadian equity returns, Canadian defined benefit pension plans posted returns of 0.4 per cent in the third quarter of 2017, marking the sixth straight quarter of growth, according to RBC Investor & Treasury Services.
Canadian equities returned 3.8 per cent in the quarter, compared with minus 1.9 per cent in the second quarter of the year. A year ago, Canadian equities posted strong returns of 6.7 per cent. Canadian fixed-income returns moved lower, posting a two per cent loss in the quarter compared to a 1.4 per cent gain in the second quarter.
“The energy sector posted stronger returns in September due to a rebound in oil prices which helped lift Canadian equities, while the bond market slipped into negative territory after strong Canadian economic growth led the Bank of Canada to raise interest rates for the first time in seven years,” said James Rausch, head of client coverage for Canada at RBC Investor & Treasury Services.
“The rate increase helped boost the financial services sector as well as drive short-term bond yields and the Canadian dollar higher. These developments will be taken into account by Canadian pension fund managers as they assess their asset allocation and look ahead to Q4 and year-end returns.”
Geopolitical activity continued to affect global equity markets, with returns of 1.2 per cent in the quarter that compared to 2.3 per cent in the second quarter and 6.7 per cent a year ago.
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