For the first quarter of 2018, diversified pooled fund managers saw a median return of minus 0.7 per cent before management fees, according to new data from Morneau Shepell Ltd.

The report showed that while returns were negative, a decrease in pension liabilities overall outweighed the poor performance of pooled funds, resulting in a modest improvement in the solvency of pension plans overall for 2018 thus far. “The solvency ratio for an average pension plan improved by about 0.3 to 1.0 per cent during the year,” said Jean Bergeron, a partner with Morneau Shepell’s asset and risk management consulting team, in a press release.

The median return of minus 0.7 per cent was in line with the benchmark portfolio allocation of 55 per cent to equities and 45 per cent to fixed income. The report noted that since the start of 2018, both long- and medium-term bonds have had a zero per cent return. Short-term bonds posted 0.2 per cent, while high-yield bonds saw a 1.5 per cent return.

Read: Strong growth, equities help pooled funds deliver 8.6% in 2017

Canadian equities also made a dent in returns, with managers achieving  minus 3.7 per cent. U.S. equities fared better, partly due to the favourable exchange rate, with managers returning 2.3 per cent. As for global equities, managers saw returns of 1.6 per cent.

“After hitting record levels in 2017, the major stock markets posted negative returns in local currency, mainly due to uncertainty and concerns about monetary policy and global trade,” said Bergeron. The report covered 334 pooled funds with a market value of more than $257 billion.

Read: Is it time for investors to revisit their expectations for equity returns?

Copyright © 2019 Transcontinental Media G.P. Originally published on

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