Canadian Plan Sponsors Rebound Strongly to Return 7% in Q1

US, Canadian equities were top-performing asset classes.

The BNY Mellon Canadian Master Trust Universe rebounded strongly during the first quarter of 2019, after ending 2018 with a negative performance, as the median return rose 7.02%. The one-year median return as of March 31 was 6.30%, while the median 10-year annualized return was up 9.77%.

US equities were the top-performing asset class, delivering a median return of 11.08%, followed by Canadian equities, and non-Canadian equities, which had a median return of 10.74% and 9.95%, respectively. International equities returned 8.66%, while fixed income and real estate returned 4.63% and 1.20%. Hedge funds had a median return of 1.78% for the quarter, while private equity reported a median loss of 0.78%.

“Financial markets around the globe experienced a recovery during the first quarter after last quarter’s sharp declines, with positive returns recorded across all equity segments,” Catherine Thrasher, vice president, strategic client solutions for CIBC Mellon, and managing director for BNY Mellon Global Risk Solutions, said in a release. “All equity asset classes posted positive results for the quarter, signifying regained confidence over the 2018 global market volatility.”

Although US equities posted the highest quarterly median return, it was just short of the S&P 500 Index’s 11.16% return. And Canadian equities also underperformed its benchmark—albeit more significantly than US equities—as the S&P/TSX Composite Index returned 13.29% during the first quarter.

International equities and non-Canadian equities outperformed the MSCI EAFE Index, which returned 7.72%, but came in below that of the MSCI World Index’s return of 10.18%. Meanwhile, fixed Income outperformed the FTSE Canada Bond Universe Index, which returned 3.91%. And emerging markets equities earned a median return of 7.70%, outperforming the MSCI Emerging Markets Index return of 7.55%.

Canadian Universities trailed among plans for the first quarter, posting median returns of 6.79%, while Canadian foundations and endowments outperformed most plans with a median return of 7.54%.

Data from The BNY Mellon Canadian Master Trust Universe are based on $226.5 billion worth of investment assets in Canadian investment plans, with the average plan size being $2.7 billion. The yardstick is designed to provide peer comparisons by plan type and size, and it comprises 83 Canadian corporate, public, and university pension plans.

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