Canadian pensions progress in third quarter: RBC

“Improving economic data from Europe and China helped spark global stocks,” says Scott MacDonald, head, pension segment development for RBC Investor & Treasury Services. “But continued speculation over Fed tapering and the looming U.S. fiscal impasse kept financial markets volatile.”

Canadian stocks rebounded from June’s low, gaining 6.9 per cent while exceeding the S&P/TSX Composite index by 0.7 per cent during the quarter. “Advances were broad across nine of the ten sectors with only the lightly weighted utilities sector posting negative numbers,” says MacDonald.

“Year-to date, Canadian equity holdings are up 10.2 per cent — considerably ahead of the index by 4.9 per cent. Value added came mainly from an under-exposure to the heavily weighted materials sector, with gold stocks in particular down 38.0 per cent for the period.”

Foreign equities moved higher for the fifth successive quarter, advancing 5.7 per cent against 5.4 per cent for the MSCI World Index. “Strength was widespread across all global regions with Europe leading the way,” adds MacDonald.

Year-to-date, foreign stocks continue to be the top performing asset class as pension plans kept pace with the global benchmark, up 21.1 per cent. “Canadian dollar weakness against most major currencies helped boost returns by over 2.2 per cent for the nine month period,” says MacDonald.

Bonds continued to show weakness as Canadian plans saw their holdings gain only 0.1 per cent in the last three months as DEX Universe Bond Index yields increased for a third straight quarter. Year-to-date, bond holdings declined 1.7 per cent while the DEX Long Term index lost 5.9 per cent and DEX Real Return Bonds are down 11.4 per cent.