Canadian defined benefit (DB) pension plan sponsors recorded an uptick in returns for the first-quarter (Q1) of 2017, according to data published Thursday by Toronto-based Northern Trust Canada.
The median Canadian DB pension plan recorded a 3.0% gain in Q1, reversing a 1.2% loss in the fourth quarter of 2016. Pension performance was “primarily driven by strong equity markets while fixed income also experienced positive performance in a reversal from last quarter,” Northern Tusts says in a news release.
“Global equity markets started the year on a strong note with all broad market indices registering positive performance,” it adds. Northern Trust points out that the U.S. equity market hit all-time highs during the quarter, and that the S&P 500 returned 5.5%.
“Optimism on the geopolitical front and a stronger Japanese Yen helped the MSCI EAFE index gain a return of 6.8% in Q1,” Northern Trust says. “A weaker U.S. dollar, better than expected economic data and easing concerns over the current U.S. administration’s protectionist measures contributed to the MSCI Emerging Markets index ending the quarter on a strong note with a return of 10.9%.”
The median return on Canadian equity during the quarter was 3.8%, Northern Trust says, and the FTSE TMX Universe gained 1.2% for the quarter, “with long and mid-term bonds outperforming short-term bonds.”
Over the past year, Canadian pension plans recorded a 9.5% gain, Northern Trust reports. Again, strong stock market returns helped drive the gain, it says.
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