Strong equity markets helped Canadian pension funds maintained their positive momentum during the first quarter, says a report.

According to RBC Dexia, pension funds earned 1.8% in Q1. “On the heels of two very strong back-to-back quarters, this is a fairly respectable start to the new year,” says the company’s director of advisory services, Don McDougall.

Domestic stocks continued to fare well in Q1, climbing 3.4%. But domestic bonds continued to post lacklustre results in the quarter. The median pension fund earned 0.9%, matching the Scotia Capital Universe Bond Index.

Over the past four years, the median Canadian plan has realized a healthy 14.1% annualized return.

Canadian equities were the dominant asset class over the four-year period, generating a whopping 23.7% annualized gain and outpacing the S&P/TSX Composite Index by 1.3%.

Foreign stocks also did their part, pushing the four-year MSCI World Index to 14.2% in Canadian dollar terms. Moreover, by limiting exposure to the underperforming market in the United States, Canadian pensions outpaced the industry benchmark by more than a full percentage point, gaining 15.4% for the period.

And Canadian plans have averaged a 6.7% return on fixed income during the last four years.

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