Canadian pension plans lost ground for the third consecutive quarter as equity markets continued to fall, according to an RBC Dexia Investor Services survey.

Pension funds slipped 1.9% in the first quarter, pushing losses to -2.7% for the latest 12-month period. Global equity was the hardest hit asset class this quarter, although a weaker Canadian dollar softened the blow for unhedged investors.

“The MSCI World Index plunged 11.9% in local currency terms,” explains Don McDougall, director of advisory services at RBC Dexia. “Performance nearly matched the index, but Canadian pensions lost only 5.5% once exchange rates are taken into account.”

During the quarter, the loonie fell nearly 7% against a basket of world currencies, including 13% against the yen, 10% against the euro and 2.7% against the U.S. dollar.

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Canadian equities were also lower, falling 2.8%, but were cushioned somewhat by strong commodity prices. Materials gained 7.3% per cent and energy was up 1.2%.

“Unfortunately,” he adds, “Canadian pensions had generally reined in their exposure to both growth sectors and underperformed the S&P/TSX Composite Index by 1.6% this quarter—and by 3.8% over the year.”

Domestic bonds remained the top quarterly performer, earning 2.8%.

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