Stock market weakness took a bite out of pension fund assets in the third quarter (Q3) of 2015 and pension fund income plummeted, according to the latest data from Statistics Canada.
The market value of employer-sponsored pension funds declined 0.6% in Q3, following a 1.0% decline in the previous quarter, StatsCan announced on Wednesday.
Pension funds’ equity holdings declined 3.6% in Q3 to $451.9 billion, while the value of bond holdings rose slightly, up 0.4% to $554.3 billion. Real estate investments grew 2.4% in Q3.
Pension fund revenue fell 28.4% in Q3 to $31.8 billion, StatsCan reports, driven by a 22.2% decline in investment income, and a 50.6% drop in profits from the sale of securities.
Funds’ expenditures increased 38.6% in Q3, mainly due to higher losses from securities sales. As a result, pension fund net income plunged 93.7% in Q3 to just $1.4 billion from $22.5 billion in the previous quarter.
With the Canadian dollar losing ground against most major currencies in the quarter, the value of pension funds’ foreign holdings surged. For example, foreign bond holdings grew 13.5% in the quarter, and foreign short-term investments increased 20.1% in Q3. This came amid a 6.4% decline for the loonie against the U.S. dollar, a 6.6% drop against the euro, and an 8.3% decline against the yen.