TORONTO, April 27, 2012 /CNW/ - Canadian pension plans started the year off on a positive note with their best results since the September 2010 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 $420 billion RBC Dexia All Plan universe, Canadian defined benefit (DB) pensions earned 4.5 per cent in the quarter ending March 31, 2012.
"Even with some levelling off in March, Canadian pension plans continued to build on the momentum from the fourth quarter of 2011," said Scott MacDonald, Head, Pensions, Insurance, Financial Institutions Segments for RBC Dexia. "The appetite for equities gained steam, reflecting a renewed sense of tempered optimism and the continued need for pension plans to seek higher returns through increased equity allocation."
Foreign equities within the DB universe led the charge in the first quarter with a median return of 9.9 per cent, outperforming the benchmark MSCI World index by 0.4 per cent.
"Double digit returns from the Consumer Discretionary, Financials and Information Technology sectors contributed to the foreign equity rally," added MacDonald. "However, the Canadian dollar also performed well, taking away performance from Canadian DB plans as the MSCI world index returned 11.2 per cent in local currencies."
Canadian equities within the DB universe also benefitted from a very strong January and February to withstand a rather lacklustre March. A second consecutive positive quarter saw pensions outperform the S&P TSX Composite index, gaining 5.6 per cent compared to the benchmark performance of 4.4 per cent.
"The strength of bank earnings helped the Financials sector gain 11.0 per cent over the quarter, and the equities success story continued with eight of the 10 sectors in the S&P TSX Composite index ending the quarter in positive territory," said MacDonald.
In contrast, bonds were the underperformers in the first quarter, as fixed income holdings in both the DB universe and the DEX Universe Bond index dropped a marginal 0.2 per cent.
"In the first quarter of 2012, signs of economic stability in Europe and improved US economic data led investors to take on more risk," said MacDonald. "The spread between government and corporate bonds narrowed in the first quarter as investors looked for higher returns from the space."
About RBC Dexia Investor Services
RBC Dexia Investor Services offers a complete range of investor services to institutions worldwide. Our unique offshore and onshore solutions, combined with the expertise of our 5,500 professionals in 15 markets, help clients grow their business and sustain enhanced performance through efficiency improvements and robust risk management practices.
Equally owned by RBC and Dexia, the company ranks among the world's top 10 global custodians with USD 2.9 trillion in client assets under administration.
RBC Dexia Investor Services Limited is a holding company that provides strategic direction and management oversight to its affiliates, including RBC Dexia Investor Services Bank S.A., a credit institution licensed in Luxembourg by the Commission de Surveillance du Secteur Financier and the Ministry of Finance. All are licensed users of the RBC trademark (a registered trademark of Royal Bank of Canada) and Dexia trademark (a registered mark of Dexia Crédit Local) and conduct their global custody and investment administration business under the RBC Dexia Investor Services brand name.
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