Canadian defined benefit pension plan sponsors recorded an uptick in returns for the first quarter of 2017, primarily driven by strong equity markets, according to research by Northern Trust Canada.
The research, which tracks the performance of Canadian institutional investment plans that use its performance measurement services, found the median plan gained three per cent, following an average loss of 1.2 per cent in the fourth quarter of 2016.
“Canadian pension funds had a good start to 2017 after a minor setback in the fourth quarter of last year,” said Arti Sharma, head of Northern Trust Canada. “Over the past year, pension funds gained a healthy 9.5 per cent, bolstered by stronger stock market performance.”
Read: Canadian equities lifted DB pension returns in 2016: report
According to Northern Trust Canada, global equity markets started the year on a strong note with all broad market indices registering positive performance. The median return on Canadian equity at 3.8 per cent outperformed the S&P/TSX Composite Index by 1.6 per cent. Meanwhile, the U.S. equity market hit all-time highs during the quarter, with the S&P 500 returning 5.5 per cent.
The MSCI EAFE Index gained a return of 6.8 per cent in the first quarter, bolstered by optimism on the geopolitical front and a stronger Japanese yen, according to the research. Meanwhile, a weaker U.S. dollar, better than expected economic data and easing concerns over the President Donald Trump’s administration’s protectionist measures contributed to the MSCI Emerging Markets Index ending the quarter strongly with a return of 10.9 per cent. Also, among the pension plans examined by Northern Trust Canada, the median global equity return of 5.3 per cent underperformed the MSCI World Index return by 0.5 per cent.
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