Video: Scott MacDonald, RBC Investor Services comments on Q2 Canadian pension performance
TORONTO, July 31, 2012 /CNW/ - Canadian pension plans gave back some of
their first quarter returns in Q2 2012, as concerns over the European
debt crisis and a weakening global economy pushed Canadian equities
lower, according to the latest survey from RBC Investor Services, which
maintains the industry's most comprehensive universe of Canadian
pension plans and money managers..
Within the $410 billion RBC Investor Services All Plan universe,
Canadian defined benefit (DB) pensions fell 1.1 per cent in the quarter
ending June 30, 2012 against gains of 4.5 percent in the first quarter.
Canadian equities were the worst performing asset class for the quarter,
with the S&P/TSX Composite falling by 5.7 percent in Q2, wiping out its
first quarter gains of 4.4 percent to end 1.5 percent lower over the
first half of the year. Pensions' foreign equity investments
underperformed the MSCI World (CAD) by 0.4 percent, reversing a trend
of positive returns for the past two quarters, while the MSCI World
index fell 3.2 percent in Canadian dollars compared to 4.3 percent in
"After the sustained rally in the previous two quarters, pension plans
felt the heat of the ongoing saga in Europe and the resulting domino
effect on Canadian and foreign equities," said Scott MacDonald, Head,
Pensions, Insurance, and Sovereign Wealth Strategy for RBC Investor
Services. "The weakening of the Canadian dollar lessened the impact of
falling foreign equities on Canadian DB plans, but the continuing
downward pressure on stock prices is eroding the gains of plans seeking
higher returns from equities."
Within the S&P/TSX Composite, seven of 10 sectors declined in the second
quarter. Information Technology fell the most, down 17.8 per cent,
while two of the largest sectors, Energy and Materials, fell by 7.3 per
cent and 10.8 per cent respectively due to concerns about global
Overall, pensions' Canadian equity holdings outperformed the S&P/TSX
Composite by 0.5 per cent, but domestic bonds were the best performing
asset class for the quarter, with the median Pension return of 2.4
percent marginally outperforming the DEX universe by 0.1 percent.
Long-term bonds were up 4.0 percent, making them the best performing
sector in the DEX Universe for the second quarter.
"Pension plans managed to outperform the S&P/TSX Composite Index in the
second quarter, being underweight in Energy and Materials, two of the
largest sectors that underperformed the S&P/TSX Composite," added
MacDonald. "But continued worries surrounding Europe and the slowdown
in the Chinese and US economies had investors seeking safety in
government bonds once again."
About RBC Investor Services
RBC Investor Services is a premier provider of investor services to
asset managers, financial institutions and other institutional
investors worldwide. Our unique approach to domestic and cross-border
solutions, combined with award-winning client service and the expertise
of 5,500 professionals in 15 markets, helps our clients achieve their
RBC Investor Services ranks among the world's top 10 global custodians
with USD 2.9 trillion (CAD 2.8 trillion) in client assets under
administration and is a wholly-owned subsidiary of Royal Bank of
Canada, one of the largest and most financially sound banks in the
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including RBC Investor Services Trust, which operates in the UK through
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Video with caption: "Video: Scott MacDonald, RBC Investor Services comments on Q2 Canadian pension performance". Video available at: http://stream1.newswire.ca/cgi-bin/playback.cgi?file=20120731_C3228_VIDEO_EN_16477.mp4&posterurl=http://photos.newswire.ca/images/20120731_C3228_PHOTO_EN_16477.jpg&clientName=RBC%20Investor%20Services&caption=Video%3A%20Scott%20MacDonald%2C%20RBC%20Investor%20Services%20comments%20on%20Q2%20Canadian%20pension%20performance&title=RBC%20INVESTOR%20SERVICES%20%2D%20RBC%20Investor%20Services%20Survey%3A%20Global%20Economy%20and%20European%20Debt%20Fears%20Dampen%20Q2%20Pension%20Returns&headline=RBC%20Investor%20Services%20Survey%3A%20Global%20Economy%20and%20European%20Debt%20Fears%20Dampen%20Q2%20Pension%20Returns
Image with caption: "Canadian Defined Benefit Pensions Universe, Median returns as at December 31st. (CNW Group/RBC Investor Services)". Image available at: http://photos.newswire.ca/images/download/20120731_C3228_PHOTO_EN_16473.jpg
Image with caption: "Canadian Defined Benefit Pensions Universe, Median returns as at June 30th (CNW Group/RBC Investor Services)". Image available at: http://photos.newswire.ca/images/download/20120731_C3228_PHOTO_EN_16475.jpg
SOURCE: RBC Investor Services
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