TORONTO, Jan. 18 /CNW/ - Canadian pension plans suffered reverses in the
final two quarters of 2007, as the spreading global credit crunch hurt stock
market performance, according to a survey just released by RBC Dexia Investor
Services, which maintains the industry's most comprehensive universe of
Canadian pension plans and money managers.
Within the CAD 340 billion RBC Dexia universe, Canadian pension funds
lost 0.5 per cent in the quarter ended December 31, returning a paltry 1.5 per
cent for the year.
"2007 was tumultuous, as the soaring loonie and spiking energy prices
reached record highs, against a backdrop of tightening global credit and
recessionary pressures in the US," said Don McDougall, Director Advisory
Services for RBC Dexia. "However, after four consecutive years of double-digit
annual returns, some weakening was in the cards."
Canadian equities were the dominant asset class, producing a respectable
8.5 per cent over the year, but lagging the S&P TSX Composite Index by 1.3 per
cent. "It was tough to beat the market in 2007, with gains concentrated in
just a few stocks," said McDougall. The top three contributors generated more
than half the TSX return in 2007: Research in Motion (up 127 per cent), Potash
Corporation of Saskatchewan (up 158 per cent) and Alcan (up 72 per cent).
"Again in 2007, currency was a critical factor for Canadian-based
investors," said McDougall. Year-over-year, Canada's dollar appreciated by
more than 12 per cent against a basket of world currencies, including 16 per
cent against the US Dollar, 15 per cent against the British Pound and 9 per
cent against the Japanese Yen. "The loonie's remarkable ascent against major
currencies prevented most pension plans from benefiting from rising foreign
stock markets," added McDougall. The MSCI World Index's 4.7 per cent gain in
local currency terms translated into a loss of 7.5 per cent for the year, once
exchange rates were taken into account.
Canadian bonds earned only 3.4 per cent for the year, despite a solid
2.6 per cent rise in the final quarter - their worst annual performance since
1999 and 0.3 per cent behind the DEX Universe Bond Index.
About RBC Dexia Investor Services
RBC Dexia Investor Services offers a complete range of investor services
to institutions worldwide. We rank among the world's top 10 global custodians,
with USD 2.8 trillion in client assets under administration. Our innovative
products and services help clients maximize operational efficiency, minimize
risk and enhance portfolio returns. And our 4,700 professionals in 15 markets
offer proven expertise to enhance clients' business performance.
For further information:
For further information: Warren Weeks, RBC Dexia Investor Services,
Toronto, (416) 955-7048