Canadian defined benefit pension plans held steady in positive territory in the first quarter of 2018 with returns of 0.2 per cent, according to RBC Investor and Treasury Services.
That’s down, however, from returns of 2.9 per cent in the first quarter of 2017 and 4.4 per cent in the final quarter of last year.
Canadian equities took a hit in the first quarter, posting minus 3.9 per cent compared to gains of 2.3 per cent and 4.2 per cent in the first and fourth quarters of 2017, respectively. Global equities also retreated, returning two per cent in the first quarter of 2018, a decrease from 6.1 per cent in the prior three-month period.
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“The first quarter of 2018 was full of instability and volatility, with Canadian equities taking the biggest hit,” said Ryan Silva, director and head of pension and insurance segments, global client coverage at RBC Investor and Treasury Services, in a news release.
Returns also felt the impact of potential interest rate hikes and the ongoing North American Free Trade Agreement negotiations. Canadian fixed-income assets posted a small return of 0.1 per cent in the first quarter, compared to 2.2 per cent at the end of 2017.
“The health-care and energy sectors, uncertainty around NAFTA trade negotiations as well as potential interest rate hikes weighed down the TSX composite index and other key indices,” said Silva.
“Geopolitical concerns, coupled with international trade and interest rate anxieties also impacted global equity returns. Asset managers should remain vigilant to ongoing volatility for the remainder of the year, and maintain a diversified portfolio to actively manage their risk exposure.”
Read: Pension plans showing positive results despite challenges for equities