Canadian pension plans saw returns averaging about 0.6 per cent in the third quarter of 2021, according to a new report by Northern Trust Canada.
Despite the sluggish growth in the quarter, gains from the first half of the year have buoyed most Canadian pension plans. The report found the median plan had seen the value of its assets rise by about 4.8 per cent on a year-to-date basis.
Allocations to domestic equities were dragged down by slow growth rates. According to the S&P/TSX composite index, Canadian equities grew just 0.2 per cent during the quarter. While the majority of sectors experienced more significant growth, health care, information and technology and materials sector stocks saw negative growth during the quarter. A drop in consumer spending also tempered gains in other areas.
Allocations to emerging market equities experienced declines of 5.9 per cent during the quarter, according to the MSCI emerging markets index. The dip was primarily tied to the instability in China’s domestic real estate market.
Pensions were more richly rewarded by allocations to equities in other developed countries, with the MSCI EAFE index up an average of 1.9 per cent. In the U.S., stocks saw average gains hit 2.9 per cent (in Canadian dollar terms) during the quarter.