Despite continuing economic uncertainty, Canadian defined benefit pension plans showed returns of 2.9 per cent in the second quarter of 2016 compared to first quarter returns of -0.03 per cent, according to RBC Investor and Treasury Services’ pension database.
The database, which tracks $650 billion in assets, also showed global equities posted gains of 1.6 per cent in the quarter, up from a 6.2 per cent loss in the previous quarter. In addition, it saw continued performance from Canadian equities, which had returns of four per cent, down slightly from 4.6 per cent in the first quarter.
Canadian pensions underperformed the TSX Composite Index return of 5.1 per cent in the first quarter as well, since materials, the best performing sector, is underweighted by pensions, said the report. The energy sector was another top performer for Canadian equities, returning 9.5 per cent as crude oil prices continued to climb from the end of the first quarter.
The report also found that Canadian fixed-income holdings returned 3.1 per cent in the second quarter of the year, up from 1.8 per cent in the previous quarter.
“Canadian pension plan returns posted notably stronger results this past quarter, thanks largely to both global and Canadian equity holdings,” said James Rausch, head of client coverage in Canada and head of banks, brokers and exchanges at RBC Investor and Treasury Services, in a news release.
“The Canadian material and energy sectors outperformed in Q2 2016, largely offsetting a quarter of sustained market volatility and economic uncertainty. Global investors will be searching for clarity regarding the U.K.’s exit process from the European Union, which may contribute to sustained volatility over the foreseeable future.”