Canadian pension plans continued to suffer from the turbulence in the global equity markets in the first quarter of 2009, according to a survey released Wednesday by RBC Dexia Investor Services.

Within the $310 billion RBC Dexia universe, pension assets shrank another 2.5% in the quarter ending March 31, bringing 12-month losses to 16.3%.

“Six of the last seven quarters have been negative, with stock markets again testing historic lows,” says Don McDougall, Director of Advisory Services for RBC Dexia. “It has been a bumpy ride, but March finished strong and, so far, April is also looking up.”

In the first three months, global equity was the worst performing asset class, losing 9.3%, despite outpacing the MSCI World Index by 0.9%. “Currency was less of a factor this quarter, but continued to have an impact over the year,” says McDougall. “The index has plunged 37.4% in local currency terms for the year, but once exchange rates are taken into account, the weaker loonie helped reduce pension losses to 30.4%.”

Canadian stocks fared better, dropping only 2% in the quarter, as strengthening commodity shares cushioned the fall. “Pensions remained under-exposed to the better-performing Materials and Energy sectors and consequently lagged the quarterly S TSX Composite index by 0.7%,” says McDougall. “Over the year, however, active management has paid off handsomely. Pensions beat the index by 1.8%.”

Thanks to a late March rally, domestic bonds earned 1.6% for the quarter, ahead of the DEX Universe. “Corporate bonds led this quarter across the maturity spectrum, but 12-month figures still show dramatic underperformance,” says McDougall.

IE