Morneau Sobeco released the results of its Performance Universe of Pension Managers’ Pooled Funds for the fourth quarter of 2008.
According to the report, in the fourth quarter of 2008, diversified pooled fund managers posted a median return of -8.3% before management fees. Since the beginning of the year, the median return was -16.5%.
Jean Bergeron, a principal in the asset management consulting practice at Morneau Sobeco, says that this is the worst performance that the firm has seen in its more than 30 years of monitoring pension fund returns.
“Not only were the results disastrous but the decline in government bond yields created an even bigger problem by increasing more than anticipated pension funds’ actuarial liability calculated on a solvency basis. The combined impact of these two factors resulted in the pension funds’ financial position deteriorating on average by about 25% in 2008,” Bergeron says.
“Finally, the disparity in the returns among portfolio managers was much greater than usual in 2008.”
In the fourth quarter of 2008, Canadian equity managers obtained a median return of -21.5%, compared to a return of -22.7% for the S&P/TSX.