Returns for defined benefit (DB) pension plans nearly evaporated in the first quarter of 2018 (Q1 2018), according to data published on Thursday from RBC Investor & Treasury Services.
The RBC Investor & Treasury Services All Plan Universe recorded a 0.2% gain in Q1 2018, down from a 4.4% return Q4 2017; and below the 2.9% generated in Q1 2017.
Canadian equities were greatly impacted during Q1 2018 posting a 3.9% loss, compared with a 4.2% gain in Q4 2107.
Global equity returns were also weaker, but still positive, managing a 2% return in Q1 2018. However, this was down from the 6.1% return recorded in Q4 2017.
Canadian fixed-income assets also saw their returns decline, posting just a 0.1% return in Q1 2018, down from 2.2% Q4 2017.
The Canadian dollar was also the worst performing major currency in Q1 2018, dropping by 2.9% against the U.S. dollar, “due to the uncertainty around trade talks and its impact on the Canadian economy and its monetary policy,” RBC says in a news release.
“The first quarter of 2018 was full of instability and volatility, with Canadian equities taking the biggest hit,” says Ryan Silva, director, head of pension and insurance segments, global client coverage, in a statement.
“The health care and energy sectors, uncertainty around NAFTA trade negotiations as well as potential interest rate hikes weighed down the TSX Composite Index and other key indices. Geopolitical concerns, coupled with international trade and interest rate anxieties also impacted global equity returns. Asset managers should remain vigilant to ongoing volatility for the remainder of the year, and maintain a diversified portfolio to actively manage their risk exposure,” he adds.