Canadian pensions lost 0.7% in the third quarter, trimming year-to-date results to 1.8%.
Currency losses continued to eclipse global equity returns. Year-to-date, the MSCI World index climbed 8.0% in local currency terms, but this translates into a -4.1% drop in value when converted into Canadian dollars.
“Particularly with the loonie’s steep rise against the U.S. dollar—up 17% this year alone—foreign exchange exposure has jumped back into the spotlight,” says the firm’s director advisory services, Don McDougall. “Given that foreign stocks constitute about half the equity allocation of a typical pension fund, Canadian plan sponsors are sharpening their focus on currency management.”
Canadian equities returned only 0.6% to pension funds in the latest quarter, trailing the S&P/TSX Composite index by 1.4%.
To read a related story, Pension Plans Hurt by Strong Loonie, click here.
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