TORONTO, Oct. 19 /CNW/ - Canada's soaring dollar again wreaked havoc on
pension funds in the third quarter, 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 pensions lost
0.7 per cent in the quarter ended September 30, 2007, trimming year-to-date
results to just 1.8 per cent.
Currency losses continued to eclipse global equity returns. Year-to-date,
the MSCI World index climbed 8.0 per cent in local currency terms, but this
translates into a -4.1 per cent drop in value when converted into Canadian
dollars. "Particularly with the loonie's steep rise against the US dollar - up
17.0 per cent this year alone - foreign exchange exposure has jumped back into
the spotlight," observed Don McDougall, Director Advisory Services, RBC Dexia
Investor Services. "Given that foreign stocks constitute about half the equity
allocation of a typical pension fund, Canadian plan sponsors are sharpening
their focus on currency management."
Canadian equities returned only 0.6 per cent to pension funds in the
latest quarter, trailing the S&P TSX Composite index by 1.4 per cent.
"Domestic stocks rallied in the month of September, driven mainly by Materials
and Technology," explained McDougall. "Unfortunately, most pension funds were
underexposed to these key sectors." Year-to-date, the picture is rosier:
pension plans gained 11.3 per cent, marginally outpacing the benchmark index.
Despite the developing credit freeze, bonds were the top-performing asset
class in the quarter: Canadian pensions earned a modest 1.7 per cent, matching
the Scotia Capital Universe Bond Index.
About RBC Dexia Investor Services
RBC Dexia Investor Services offers a complete range of investor services
to institutions worldwide. Established in January 2006, we are a joint venture
equally owned by Royal Bank of Canada and Dexia. We rank among the world's top
10 global custodians, with USD 2.6 trillion in client assets under
administration. Our innovative products and services help clients maximise
operational efficiency, minimise risk and enhance portfolio returns. And our
more than 4,500 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