Canada’s DB pension plans post 5% return in Q4, close 2020 with 10% gain

Canada’s defined benefit pension plans posted a median return of five per cent during the fourth quarter of 2020 and closed a volatile year with a 10 per cent gain, according to Northern Trust Canada’s pension universe.

Despite uncertainty from factors including the U.S. presidential election and Brexit negotiations, the last quarter saw global equity markets post healthy positive returns as investors welcomed the relief of further fiscal stimulus and the long-awaited approval of coronavirus vaccines.

Read: Canadian DB pension plans post 3.2% return in Q3: report

Canadian equities, as measured by the S&P/TSX composite index, grew nine per cent for the quarter and 5.6 per cent for the year. Health care and the consumer-discretionary sector led performance for the quarter and information technology was the top performer for the year.

U.S. equities, as measured by the S&P 500 index, generated seven per cent for the quarter with all sectors in positive territory and 16.3 per cent for the year, led by information technology. The NASDAQ witnessed its best year since 2009 and the S&P 500 and Dow Jones concluded 2020 at record highs.

International developed markets, as measured by the MSCI EAFE index, generated 10.7 per cent for the quarter and 6.4 per cent for the year. All sectors, led by energy, posted positive returns for the quarter, with the exception of health care returning a modest decline. Again, information technology closed the year as the top-performing sector.

And the MSCI emerging markets index grew 14.2 per cent for the quarter with positive gains across all sectors and closed the year with a 16.6 per cent return, led by health care and information technology.

Read: Canadian DB pension plans post 3% return, buoyed by equities: report