Canadian Pension Plans Return 2.16% in Q2

Despite positive returns, nearly all asset classes fell short of their benchmarks.

Canadian pension plan returns picked up the pace in the second quarter, rising 2.16%, after edging only 0.37% higher during the first quarter, according to BNY Mellon Global Risk Solutions.

It was the ninth straight quarter of positive results for the BNY Mellon Canadian Master Trust Universe, which also reported a one-year median return of 7.59%, and a 10-year annualized return of 7.14%.

The BNY Mellon Canadian Master Trust Universe results are based on C$242.9 billion ($186.9 billion) worth of investment assets in Canadian investment plans, with an average plan size of C$2.9 billion. The universe is intended to provide comparisons by plan type and size, and it comprises 83 Canadian corporate, public, and university pension plans.

Canadian universities posted a median return of 2.05% for the quarter, and a 2.45% return for the year to date, while Canadian foundations and endowments posted a median return of 2.61% for the quarter, and 2.46% since the start of 2018.

Canadian and US equities were the top-performing asset classes for the quarter, with median returns of 5.48% and 5.24%, respectively, while non-Canadian and international equity medians returned 2.31% and 0.44%, respectively. Fixed income produced a median return of 0.74%, while emerging markets was the only asset class that posted a negative median return with a loss of 6.2%.

Although all but one equity segment had positive returns, nearly all trailed their benchmark index. Canadian equity’s 5.48% fell short of the S&P/TSX Composite Index return of 6.77%, while the US equity median quarterly return of 5.24% lagged behind the S&P 500 Index result of 5.54%. Non-Canadian equity’s 2.31% was well short of the MSCI World Index’s 4.00%, while international equity’s 0.44% was less than half the MSCI EAFE Index’s 1.05% return. And the loss of 6.2% from emerging markets equity was wider than the MSCI Emerging Markets index’s loss of 5.98%.

The fixed income asset class was the only one to beat its benchmark as the median return of 0.74% outperformed the FTSE TMX Canada Bond Universe Index return of 0.51%.

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