TORONTO, Jan. 22, 2014 /CNW/ - Canadian pension plans posted solid gains
in 2013 as global equity markets continued to surge during the fourth
quarter, according to the latest survey from RBC Investor & Treasury
Within the $460 billion RBC Investor & Treasury Services All Plan
universe - the industry's most comprehensive universe of Canadian
pension plans - defined benefit (DB) pension assets returned 6.1 per
cent during the three months ending December 31, 2013, bringing annual
gains to 14.2 per cent.
"Pensions gained a lot of traction in 2013," said Scott MacDonald,
Managing Director, Pensions for RBC Investor & Treasury Services.
"Strong equity gains and a weaker Canadian dollar led to an increase in
assets, while higher long term bond yields reduced most plan
liabilities, which will please sponsors."
Foreign equity was the top performing asset class, rising 11.5 per cent
in the fourth quarter while bringing full-year results up 35.8 per cent
- ahead of the MSCI World Index by 0.6 per cent. "Currency gains
accounted for approximately 20 per cent of the returns, but strength
was spread across the majority of developed markets. The U.S.
contributed the most, with the S&P 500, up 41.3 per cent, having its
best calendar year result in Canadian dollar terms since 1958," added
Domestic stocks also helped, advancing 19.4 per cent for the year, but
were held back by the materials sector which continued to show weakness
in the fourth quarter and subsequently shed close to 30 per cent of its
value since the beginning of 2013. "2013 was a really good year for
active Canadian equity management," said MacDonald. "Most pensions
maintained an underexposure to the sector and consequently outperformed
the S&P/TSX Composite Index by 6.4 per cent during the year."
Canadian pensions however had their largest annual fixed income decline
since 1994, losing 1.3 per cent over the last 12 months. "The weakness
spread across the market, but inflation-sensitive longer-duration bonds
were the most affected as the DEX Real Return Bond Index declined 13.1
per cent while DEX Long Term Bonds were down 6.2 per cent," noted
MacDonald. "In this environment, the risk mitigating liability driven
strategies were the hardest hit on the asset side."
About RBC Investor & Treasury Services
RBC Investor & Treasury Services (RBC I&TS) is a specialist provider
of asset servicing, custody, payments and treasury services for
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administration (as at December 05, 2013).
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