Canadian DB plan returns rise in fourth quarter as equity markets rebound

Canadian defined benefit pension plans returned a median 2.52 per cent for the fourth quarter of 2019, reflecting an improved economic outlook for investors, according to BNY Mellon Asset Management Canada Ltd.

Its Canadian master trust universe, which is based on 84 Canadian corporate, public and university pension plans, reported a one-year median return of 13.92 per cent.

Read: Canadian DB pension plans post modest returns in second quarter

“Equity markets displayed a rebound from economic slowdown around the globe, reporting higher positive performance in the fourth quarter as compared to the last quarter’s returns,” said Catherine Thrasher, head of strategic client solutions and global risk solutions at CIBC Mellon and BNY Mellon. “Continued market uncertainties led to fixed income reporting negative performance while alternative asset classes posted low, but positive results for the quarter.”

Among alternative asset classes, real estate delivered the highest performance for the quarter, at 1.88 per cent, followed by private equity (1.41 per cent). Within traditional asset classes, international equity led the way, with a quarterly median return of 6.83 per cent, while fixed income returns posted a negative performance of -0.92 per cent.

Read: Hefty equity gains drove Canadian DB pensions to double-digit returns in 2019