Diversified pooled fund managers had a performance similar to the benchmark during the second quarter.
According to Morneau Shepell’s Performance Universe of Pension Managers’ Pooled Funds, these managers’ median return (2.9%) was similar to the benchmark portfolio (with an allocation of 55% equity and 45% fixed income) used by many pension funds (2.9%).
“The stock market continued to grow in the second quarter, and the decrease in interest rates generated good returns in the bond market,” says Jean Bergeron, partner and team leader of Morneau Shepell’s asset and risk management consulting team. “This market performance kept pension fund returns in positive territory for the eighth quarter in a row.”
Given the decrease in interest rates used to discount pension benefits, the solvency liability of an average pension fund was up about 3.7% in the second quarter, he adds.
“Pension fund financial positions have thus deteriorated slightly since the beginning of the year, although overall they have remained relatively stable.”
The Performance Universe covers about 360 pooled funds managed by nearly 50 investment management firms. The pooled funds included in the Universe have a market value of more than $250 billion.
The results of Morneau Shepell’s study are based on the returns provided by leading portfolio managers, ranging from independent investment management firms to insurance companies, trust companies and financial institutions. The returns are calculated before deduction of management fees.
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