Resurgent global stock markets continued to lift pension assets in the first quarter, according to the latest survey from Toronto-based RBC Investor Services.
Within the $460 billion RBC Investor & Treasury Services All Plan universe, defined benefit (DB) pensions earned 4.4% in the quarter ending March 31, 2013, bringing 12-month results to 9.4%.
“On the back of optimism over the U.S. recovery, and central bank commitments to maintain loose monetary policies, investors built on last fall’s run, helping pension plans to maintain momentum,” said Scott MacDonald, head, pensions, insurance, and sovereign wealth strategy for RBC Investor & Treasury Services.
Global equities continued to be the top performing asset class as pension plans kept pace with the MSCI World Index, gaining 10.0% for the quarter.
“Strength came primarily from the U.S. market which set new highs, but also from Japanese stocks, up in excess of 20% in local currency terms. Pensions did well to match the World benchmark, as most were under exposed to the U.S. market,” noted MacDonald.
Canadian equity markets also contributed to pension performance as the S&P/TSX Composite rose 3.3% in the quarter.
“Advances were fairly broad but weakness in mining stocks drove the heavily weighted materials sector down 10.4%. However, most pension plans were under exposed and subsequently outperformed the index by 1.4% for the quarter,” said MacDonald.
Bonds generated lacklustre returns as longer duration maturities were affected early in the quarter. Added MacDonald: “With recent events in Cyprus spooking some investors back to the bond market, Canadian pension plans earned 0.6% over the last three months in their fixed income allocation.”
RBC Investor Services is part of Royal Bank of Canada’s (TSX:RY) Investor & Treasury Services segment.