The market value of Canadian trusteed pension fund assets decreased by 1.3 per cent in Q4 2018 compared to the previous quarter, landing at $1.87 trillion. Yet, on a year-over-year basis, the market value of assets rose by 1.6 per cent compared to the fourth quarter of 2017.
The strongest area of growth was mortgage investments, which was up 11.1 per cent compared to the third quarter of 2018, reaching $27.4 billion. And real estate investments increased by 5.5 per cent over this period to $201.6 billion. The value of bonds was also up, by 0.4 per cent to $593.9 billion.
In contrast, the value of stock holdings decreased by 5.9 per cent, to a total of $536.6 billion.
On a more global note, the Organisation for Economic Co-operation and Development recently released a report on 2018 pension assets. Its preliminary data found pension fund assets in PECD countries reached US$27.6 trillion, which was almost four per cent lower than in 2017.
The preliminary numbers for Canada showed a 2.9 per cent increase pension fund assets.
“Poor financial results of pension funds in 2018 probably result from the downturn on equity markets in the last quarter of 2018,” the report said. “Some of the major stocks indices fell sharply in 2018 compared to 2017, suffering sometimes one of the worst declines since the 2008 financial crisis (i.e., S&P 500). This negative performance on equity markets contributed to the decline of pension fund assets in 2018 when these losses were not compensated by increases in contributions of plan members.”
That said, the report cautioned, due to the long-term horizon of pension funds, long-term trends matter more than short-term results. As well, results will likely improve because of the equity recovery in the first quarter of 2019.