RBC Investor & Treasury Services quarterly survey: Global equities drive pension returns in Q1

TORONTO, April 30, 2015 /CNW/ - During a quarter that featured falling oil prices, a Bank of Canada rate cut and uneven global economic data, Canadian pension plans generated positive returns for the seventh consecutive quarter.

According to the $600 billion RBC Investor & Treasury Services All Plan universe - the industry's most comprehensive universe of Canadian pension plans - defined benefit (DB) pension plans returned 6.6 per cent for the first quarter of 2015.

"Following the Bank of Canada's surprise rate cut announcement in January, long term interest rates continued to fall. Even though their asset performance for the quarter was strong, Canadian pensions face growing pressure if asset returns fail to keep pace with liabilities," said Scott MacDonald, managing director, Pensions, RBC Investor & Treasury Services.

The best performing asset class in the first quarter was Foreign Equities, which returned 12.0 per cent, in line with the benchmark MSCI World Index return of 11.9 per cent. "While both U.S. and non-U.S. foreign equities delivered double digit returns for Canadian investors in the first quarter, the two segments had contrasting performance drivers: U.S. equities were boosted by the U.S. dollar appreciating 9.3 per cent against the Canadian dollar, even as U.S. markets stayed flat. Europe, on the other hand, benefitted from cheap oil, increasing exports, and the implementation of the European Central Bank's Quantitative Easing program," said MacDonald.

Canadian equities returned 2.3 per cent for the quarter versus 2.6 per cent for the benchmark TSX Composite Index. "Despite Financials and Energy declining, deal activity in the Health Care sector along with gains in IT and Consumer Discretionary helped offset those losses," said MacDonald.

"As Canadian 10 year yields fell for the fifth consecutive quarter, Canadian pensions' bond holdings returned 4.6 per cent. Long-duration bonds continued to be the best performing segment, with the FTSE TMX Canada Long Term Overall Bond Index returning 7.1 per cent for the quarter," said MacDonald.

About RBC Investor & Treasury Services
RBC Investor & Treasury Services (RBC I&TS) is a specialist provider of asset services, custody, payments and treasury services for financial and other institutional investors worldwide. We serve clients from 18 locations across North America, Europe, Asia and Australia, delivering custodial, advisory, financing and other services to safeguard clients' assets, maximize liquidity and manage risk in multiple jurisdictions. RBC I&TS ranks among the world's top 10 global asset servicing businesses, with CAD 3.7 trillion (USD 3 trillion) in client assets under administration (as at January 31, 2015).

About RBC
Royal Bank of Canada is Canada's largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America's leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis. We employ approximately 78,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 39 other countries. For more information, please visit rbc.com.

RBC supports a broad range of community initiatives through donations, sponsorships and employee volunteer activities. In 2014, we contributed more than $111 million to causes worldwide, including donations and community investments of more than $76 million and $35 million in sponsorships.

SOURCE RBC

For further information:

Tessa Riley, 416-348-2754