Global markets bounced back during the September quarter, boosting Canadian pension fund investments by a solid 4.7% over the period, according to a survey just released by RBC Dexia Investor Services.

“Despite a bumpy ride in the June quarter, pension funds have earned 5.5% year-to-date — a respectable return and comfortably above inflation,” noted Don McDougall, Director Advisory Services, RBC Dexia Investor Services. Within the $340 billion universe, all asset classes produced favourable results, benefiting from encouraging economic news and a stable Canadian dollar in the three months ending September 30.

Global equities were top-performers in the quarter, rising 5.3% in Canadian dollar terms. According to the RBC Dexia survey, Canadian pension funds have outpaced the MSCI World Index over the last quarter and year-to-date.

Domestic bonds posted the best quarterly performance in three years: the median Canadian pension plan earned 4.9%, matching the Scotia Capital Universe Bond Index. Moreover, long bonds (maturities of ten years or more), jumped 8.3% — a 15-year high. “Allocations vary wildly, but long bonds are gaining popularity,” observed McDougall. “Defined benefit plans with looming pension liabilities are strategically buying long bonds to better match their future obligations to retirees.”

Sliding crude oil prices dampened the Canadian equity market and the energy-heavy S&P/TSX Composite Index rose only 1.9% for the quarter. “Fortunately, most Canadian pension funds had already reined in their exposure to the sector, and consequently outperformed the benchmark equity index by a whopping 2.1% for the period,” said McDougall.