The rise of the Canadian dollar against its U.S. counterpart had a significant impact on the performance of pension funds last year, according to Morneau Sobeco.
The results of its Performance Universe of Pension Managers’ Pooled Funds finds that pension funds obtained a median return of 2.1% in 2007. The benchmark portfolio—55% equity and 45% fixed income—had a return of 2.7%.
Returns on U.S. equities were about 16% lower when calculated in Canadian dollars.
Since pension funds invest on average about 30% in foreign equity, the strength of the dollar in relation to other currencies explains the modes performance of pension funds during the year, explains Jean Bergeron, a principal in the company’s asset management consulting practice.
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Morneau Sobeco’s Performance Universe covers more than 350 pooled funds managed by more than 60 investment management firms. The pooled funds have a market value in excess of $150 billion.
The returns are calculated before deduction of management fees.
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