Canadian pension plans lost ground for the third consecutive quarter, as deepening financial woes depressed equity markets worldwide, according to a survey just released by RBC Dexia Investor Services.

Within the $340 billion RBC Dexia universe, Canadian pension funds slipped 1.9% in the quarter ended March 31, pushing losses to -2.7% for the latest 12-month period.

This quarter, global equity was the hardest hit asset class, although a weaker loonie softened the blow for unhedged Canadian-based investors. “The MSCI World Index plunged 11.9% in local currency terms. Performance nearly matched the index, but Canadian pensions lost only 5.5% once exchange rates are taken into account,” noted Don McDougall, director of advisory services for RBC Dexia. Over the period, the Canadian dollar depreciated almost 7% against a basket of world currencies, including 2.7% against the U.S. dollar, 10% against the euro and 13% against the Japanese yen.

The Canadian stock market also retreated, down 2.8% this quarter, but was somewhat cushioned by strong commodity prices. As gold and crude oil reached record highs, materials gained 7.3% and energy was up 1.2% — the only two sectors with positive quarterly returns. “Unfortunately, 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,” observed McDougall.

Domestic bonds remained the top quarterly performer, earning 2.8%, but lagging the DEX Universe Bond Index by 0.2%. “Spreads varied considerably,” explained McDougall. “Real return bonds generated 5.9%, while longer maturity corporate bonds lost 0.3%.”