Diversified pooled fund managers posted a median return of 0.1% before management fees in the second quarter of this year, according to Morneau Shepell’s Performance Universe of Pension Managers’ Pooled Funds.
Since the beginning of the year, the median return has been 4.8%.
“The poor performance of bonds and the Canadian stock market resulted, overall, in relatively modest pension fund returns for the quarter,” says Jean Bergeron, partner and team leader of the firm’s asset and risk management consulting team.
Many Canadian equity managers were still able to outperform the S&P/TSX. Their return of 0.1% was 1% above that of the benchmark portfolio (with allocation of 55% in equity and 45% in fixed income) used by many pension funds (-0.9%).
On the other hand, American and international equities had a very good quarter, so pension funds with a strong allocation in these two asset classes probably achieved higher-than-median returns.
“With respect to actuarial liability, the increase in the interest rates used to discount pension benefits resulted, for an average pension fund, in a reduction in the solvency liability during the quarter,” he adds. “In fact, since the start of the year, the increase in rates has allowed the pension fund financial positions to improve significantly.”
The Performance Universe covers about 355 pooled funds managed by nearly 50 investment management firms. The pooled funds included in the universe have a market value of more than $225 billion.
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